The market value of a company is calculated as the sum of the net assets and...

The market value of a company is calculated as the sum of the net assets and owners equity on the company's balance sheet. Discuss the validity of this statement.

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Expert Solution

The given statement is a FALSE statement because market value of a company will be calculated in context of the market value of Assets and liabilities and it is not about calculation in context of sum of Net Asset and owner equity on the balance sheet of the company.

The assets and liabilities on the balance sheet is reflective of the historical cost and it is not related to the market value so when we will be calculating the market value of the company, we will be calculating it through market prices rather than historical prices.

The given statement is FALSE.

jeff jeffy answered 2 years ago

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