Pls explain in detail A pharmaceutical and financial investment company both have market value (total stockvalue) of $500 million. Which statement is most correct?a. They may have different net asset values because one company is more ethical thanthe other.O b. Both companies must have similar net asset value.O c. They may have different net asset values because in accounting the fair value of stocksused in the financial investment company is included on the GAAP balance sheet as anasset yet the value of a patented drug developed by the pharmaceutical company isNOT included.O d. Both companies have the same tax liability.

A pharmaceutical company is a company which produces or manufactures medicines which are in form of…

Answered: Pls explain in detail

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Which of the following is not true with regard to the relationship between R&D expenses and the value of the company’s stock shares, as perceived by investors and analysts? Multiple Choice: A.There is no evidence that R&D expenses represent value-relevant information to investors. B. There is a causal relationship between R&D expenditures and future financial benefits. C. A $1 increase in R&D expenditures leads to a $5 increase in the market value of the company’s stock shares. D. Analysts adjust estimates of unrecorded R&D assets which are then used to adjust reported earnings and book values.
A company has been using the fair-value method to account for its investment. The company now has the ability to significantly influence the investee and the equity method has been deemed appropriate. Which of the following statements is true? Multiple Choice A cumulative effect change in accounting principle must occur. A prospective change in accounting principle must occur. A retrospective change in accounting principle must occur. The investor will not receive future dividends from the investee. Future dividends will continue to be recorded as revenue.
Which of the following statement is INCORRECT? Question 15 options: 1) The finance manager manages the short-term balance sheet items of the company, such as current assets and current liabilities. 2) The finance manager uses investment evaluation techniques to decide whether to purchase fixed assets. 3) The finance manager seeks to maximise the firm’s wealth when deciding on the choice of capital sources such as debts and equity. 4) The right-hand side of the balance sheet refers to the company’s investment decisions to buy fixed assets to generate returns.
Which one of the following statements about book value and market value is correct? Group of answer choices a. Both book value and market value are forward-looking. b. Both book value and market value account for all forms of assets and liabilities of a firm. c. The market value of equity should not differ much from the book value of equity. d. Decision-making should be based on market value instead of book value.
George H. and James W. have identified two companies, Riccarton Plc and Edinburgh Plc they would be interested in investing. As they can only invest in one of the companies, they have asked you to provide them with an assessment of the performance of both companies based on the following ratios: Return on Capital Employed (ROCE), Current Ratio, Gearing Ratio and Price/Earnings (P/E) Ratio. The following information from the Statement of Financial Position (Balance Sheet) and the Income Statement (Profit and Loss Account) for both companies is available: (a) Calculate the following ratios: • Return on Capital Employed (ROCE) • Current Ratio • Gearing Ratio • Price/Earnings (P/E) Ratio (b) Based on the above ratios explain, which company George H. and James W. should invest in. You should also briefly discuss the limitations of your analysis.
See image attached 1.Compare and analyse the performance of the two companies based on their profit margin, asset turnover, ROCE, and debt equity ratio and explain what the board of Box Limited needs to do to achieve their objective . 2. Which other non-financial measures can influence the decision of the board of Box Limited?
Which of the following is NOT an acceptable basis on which to measure an expense? A cash outflow. O A pro rata measure. O An estimation. O All of these options are acceptable. O An invoice price. Which of the following is a likely explanation as to why preparers would choose to deliberately understate the reported profit of a listed entity? O To reduce investors' expectations of future earnings. O To decrease the entity's weighted average cost of capital. To reduce the entity's tax liability. O To satisfy the qualitative characteristic of faithful representation. O All of these are likely explanations why preparers would deliberately understate the reported profit.
In order to arrive at an intrinsic value for the stock of a company when using the Corporate Valuation model we must subtract debt and preferred stock from the market value of the firm we calculated. A True B) False
Which of the following statements is CORRECT? A. Net working capital is defined as current assets minus the difference between current liabilities and notes payable, and any increase in the current ratio automatically indicates that net working capital has increased B. If a company follows a policy of "matching maturities," this means that it matches its use of common stock with its use of long-term debt as opposed to short-term debt. C. Net working capital is defined as current assets minus the difference between current liabilities and notes payable, and any decrease in the current ratio automatically indicates that net working capital has decreased. D. Credit policy has an impact on working capital because it influences both sales and the time before receivables are collected.
What is the blend of long-term financial sources used to finance the firm which may include debt, equity and preferred stock? اخترأحد الخيارات a. Risk and Return b. Capital Budgeting c. Profit Maximization d. None of the option e. Working Capital Creditors look for a. Net working capital for their safety b. High net working capital for their safety c. Less net working capital for their safety d. None of the options e. Balance net working capital for their safety
Financial Ratios analysis is a part of Group of answer choices Fundamental Analysis Economic Analysis Industry Analysis Technical Analysis 2. Financial Ratio Analysis does not enable us to Group of answer choices Compare financial conditions across firms of different sizes. Determine the best time when to invest in a company’s stock. Measure trends of how well a firm is performing over time. How well a firm is managing its debt.
The cost of equity is ________. Group of answer choices A. the interest associated with debt B. the rate of return required by investors to incentivize them to invest in a company C. the weighted average cost of capital D. equal to the amount of asset turnover

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