Question

In: Accounting

The total amount of stockholders' equity reported on the balance sheet is often: Select one: a....

The total amount of stockholders' equity reported on the balance sheet is often:

Select one:

a. not accurate due to too many estimates

b. all of the above

c. not representative of the value of the company to its stockholders

d. too hard for the average investor to locate

Solutions

Expert Solution

The total amount of stock holder equity reported on the balance sheet is book value amount of the stockholders portion as an equity. It does not resembles the true and actual value of the equity as the assets and liabilities are at cost and not adjusted at the book value. Further the equity in the balance sheet is shown at cost it is being issued and additional paid up capital , it does not consider the market value of the equities being traded, so treating it as a value of company is not logical.

Further it is not correct that the total amount of stockholders equity is not accurate due to too many estimates and also that it's too hard for the average investors to locate , as all the estimations are made on accounting principles basis and the presentation is very systematic and clear on the face of the balance sheet.

Thus the correct option is ---​​​​---C.

i.e not representative of the value of the company to its stockholders.

ekkarill92 answered 2 years ago
Next > < Previous

Related Solutions

You are given the following information: Stockholders' equity as reported on the firm’s balance sheet =...
You are given the following information: Stockholders' equity as reported on the firm’s balance sheet = $3 billion, price/earnings ratio = 11, common shares outstanding = 140 million, and market/book ratio = 2.3. The firm's market value of total debt is $6 billion, the firm has cash and equivalents totaling $250 million, and the firm's EBITDA equals $3 billion. What is the price of a share of the company's common stock? Do not round intermediate calculations. Round your answer to...
You are given the following information: Stockholders' equity as reported on the firm’s balance sheet =...
You are given the following information: Stockholders' equity as reported on the firm’s balance sheet = $5.5 billion, price/earnings ratio = 11.5, common shares outstanding = 52 million, and market/book ratio = 1.4. Calculate the price of a share of the company's common stock. Round your answer to the nearest cent.
You are given the following information: Stockholders' equity as reported on the firm’s balance sheet =...
You are given the following information: Stockholders' equity as reported on the firm’s balance sheet = $3 billion, price/earnings ratio = 17.5, common shares outstanding = 140 million, and market/book ratio = 2.8. The firm's market value of total debt is $6 billion, the firm has cash and equivalents totaling $340 million, and the firm's EBITDA equals $1 billion. What is the price of a share of the company's common stock? Do not round intermediate calculations. Round your answer to...
The stockholders' equity section on the December 31 balance sheet of Chemfast Corporation reported the following...
The stockholders' equity section on the December 31 balance sheet of Chemfast Corporation reported the following amounts: Contributed Capital Preferred Stock (par $20; authorized 10,000 shares, ? issued, of which 1,000 shares are held as treasury stock) $ 116,000 Additional Paid-in Capital, Preferred 17,690 Common Stock (no-par; authorized 20,000 shares, issued and outstanding 6,600 shares) 699,600 Retained Earnings 36,000 Treasury Stock, 1,000 Preferred shares at cost 9,800 Assume that no shares of treasury stock have been sold in the past....
Balance Sheet Question: Based on the Balance Sheet you prepared on your scratch paper, what is amount of the Total Stockholders' Equity shown on the Balance Sheet you prepared on your scratch paper?
Balance Sheet Question: Based on the Balance Sheet you prepared on your scratch paper, what is amount of the Total Stockholders' Equity shown on the Balance Sheet you prepared on your scratch paper? Fill in the blank with your calculated number. DO NOT include commas, $ signs, period, decimal points, etc., just enter the raw number. Webcourses will add commas to your answer automatically. For example, if you calculated the answer to be $24,123, you would only input: 24123
Analysis of Stockholders' Equity The Stockholders' Equity section of the December 31, 2017, balance sheet of...
Analysis of Stockholders' Equity The Stockholders' Equity section of the December 31, 2017, balance sheet of Eldon Company appeared as follows: Preferred stock, $40 par value, 5,000 shares authorized, ? shares issued $200,000 Common stock, ? par, 10,000 shares authorized, 10,000 shares issued 100,000 Additional paid-in capital—Preferred 9,000 Additional paid-in capital—Common 800,000 Additional paid-in capital—Treasury stock 2,000 Total contributed capital $1,111,000 Retained earnings 39,000 Treasury stock, preferred, 100 shares (3,300) Total stockholders’ equity $ ? Required: Determine the following items...
The stockholders' equity section on the December 31 balance sheet of Hadley Corporation reported the following amounts:
  The stockholders' equity section on the December 31 balance sheet of Hadley Corporation reported the following amounts: Preferred Stock (par $50; authorized 10,000 shares, ? issued 322,700 Additional Paid-in Capital, Preferred 18,962 Common Stock (no-par; authorized 20,000 shares, issued and outstanding 5,300 shares) 58,784 Retained Earnings 160,732 Treasury Stock, 1,000 Preferred shares at cost 50,355 What is the total paid in capital for Hadley Corporation?   Shepherd Company’s Stockholder’s equity is as follows: Common Stock, $ 1 par           $13,557 Additional...
Stockholders’ Equity: Transactions and Balance Sheet Presentation The stockholders’ equity of Summit Corporation at January 1...
Stockholders’ Equity: Transactions and Balance Sheet Presentation The stockholders’ equity of Summit Corporation at January 1 follows: 7 Percent preferred stock, $100 par value, 20,000 shares authorized; 5,000 shares issued and outstanding $500,000 Common stock, $15 par value, 100,000 shares authorized; 40,000 shares issued and outstanding 600,000 Paid-in capital in excess of par value-Preferred stock 24,000 Paid-in capital in excess of par value-Common stock 360,000 Retained earnings 325,000 Total Stockholders' Equity $1,809,000 The following transactions, among others, occurred during the...
Stockholders' Equity: Transactions and Statement The stockholders' equity section of Night Corporation's balance sheet at January...
Stockholders' Equity: Transactions and Statement The stockholders' equity section of Night Corporation's balance sheet at January 1 follows: Common stock, $10 par value, 300,000 shares authorized, 60,000 shares 600,000 issued, 6,000 shares in treasury Additional paid-in capital In excess of par value 960,000 From treasury stock 60,000 1,020,000 Retained earnings 696,000 2,316,000 Less: Treasury stock (6,000 shares) at cost 276,000 Total Stockholders’ Equity 2,040,000 The following transactions affecting stockholders’ equity occurred during the year: Jan. 8 Issued 15,000 shares of...
Stockholders’ Equity: Transactions and Balance Sheet Presentation The stockholders’ equity of Summit Corporation at January 1...
Stockholders’ Equity: Transactions and Balance Sheet Presentation The stockholders’ equity of Summit Corporation at January 1 follows: 7 Percent preferred stock, $100 par value, 20,000 shares authorized; 5,000 shares issued and outstanding $500,000 Common stock, $15 par value, 100,000 shares authorized; 40,000 shares issued and outstanding 600,000 Paid-in capital in excess of par value-Preferred stock 24,000 Paid-in capital in excess of par value-Common stock 360,000 Retained earnings 325,000 Total Stockholders' Equity $1,809,000 The following transactions, among others, occurred during the...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT