http://www.brighthub.com/office/finance.aspxenhttp://www.brighthub.com/office/finance/articles/19318.aspxMon, 21 Sep 2009 19:16:13 GMTb133e95a-c263-4882-8f2a-b24547eff78e:19318johngAn investor’s valuation of firm must go beyond book values of assets and liabilities. The market values give a much better estimate of stockholder equity. The historical information found on a corporation’s financial statements represents only the company’s financial position at some time in the past. No matter how strict accounting practices...http://www.brighthub.com/office/finance/articles/19317.aspxMon, 21 Sep 2009 19:15:49 GMTb133e95a-c263-4882-8f2a-b24547eff78e:19317johngBook values and market values of liabilities can differ when a company is experiencing financial distress. Investors must be able to properly value liabilities under this condition. Financial statements are historical records of a company’s position at some point in the past. By the time financial statements are made public, changes in various econ...http://www.brighthub.com/office/finance/articles/19314.aspxMon, 21 Sep 2009 19:15:21 GMTb133e95a-c263-4882-8f2a-b24547eff78e:19314johngJust like assets, the book value of a liability can differ from its market value. Usually this discrepancy is smaller and less important. Since financial statements are historical records, they represent what a company was at a point in the past. However, the value of a company’s assets and liabilities are constantly changing in reaction to market ...http://www.brighthub.com/office/finance/articles/19313.aspxMon, 21 Sep 2009 19:14:51 GMTb133e95a-c263-4882-8f2a-b24547eff78e:19313johngThe values of intangible assets can be much more variable than tangible assets. This variability increases the likelihood of a discrepancy between book and market values. Financial statements are historical documents that show what a company was worth at one point in time. Because of standard accounting practices, an asset must be recorded at the v...http://www.brighthub.com/office/finance/articles/19312.aspxMon, 21 Sep 2009 19:12:55 GMTb133e95a-c263-4882-8f2a-b24547eff78e:19312johngLiquidity affects the discrepancy between the book and market value of an asset. Lower liquidity means lower value. Financial statements provide snapshot summaries of a company’s financial position. This snapshot is always from a historical perspective because even by the time the statements are published, market conditions and other factors have c...http://www.brighthub.com/office/finance/articles/19310.aspxMon, 21 Sep 2009 19:12:18 GMTb133e95a-c263-4882-8f2a-b24547eff78e:19310johngInflation can have a large impact on the discrepancy between an asset’s book and market value. Inflation is another lesson in the time value of money. Calculating Inflation Financial statements provided by a company are nothing more than historical documents that indicate the financial position of the company at some time in the past. Fast-ch...http://www.brighthub.com/office/finance/articles/19309.aspxMon, 21 Sep 2009 19:10:36 GMTb133e95a-c263-4882-8f2a-b24547eff78e:19309johngOne of the reasons there is a discrepancy between the market and book value of an asset is the time since its acquisition. Wise investors can spot and value this difference well. Financial statements are historical documents that show what a company looked like at one point in time in the past. The problem with this historical perspective is that m...http://www.brighthub.com/office/finance/articles/19034.aspxMon, 21 Sep 2009 19:10:02 GMTb133e95a-c263-4882-8f2a-b24547eff78e:19034johngWhen one person acts in the interests of another, the possibility of a moral hazard results in expenditures to avoid a negative outcome for the principal. Agents acting in the interests of a principal present the danger of a moral hazard when agents can behave unobserved in their own self-interest. The separation of ownership and control in the mod...http://www.brighthub.com/office/finance/articles/19033.aspxMon, 21 Sep 2009 19:09:33 GMTb133e95a-c263-4882-8f2a-b24547eff78e:19033johngConflict in principal-agent relationships, called an agency problem, results in monitoring by principals to protect their financial interests. Principal-Agent Relationships occur whenever one person acts in the interests of another. Complex modern corporations have so many stakeholders that there are many simultaneous principal-agent pairings makin...http://www.brighthub.com/office/finance/articles/19031.aspxMon, 21 Sep 2009 19:09:04 GMTb133e95a-c263-4882-8f2a-b24547eff78e:19031johngWhenever one person acts in the interests of another, there are bound to be conflicts between the agent acting on behalf of the principal and working in his/her own self-interest. Principal-Agent Relationships exist whenever one person or party works in the interests of another party. Some of these relationships arise through obligatory contrac...http://www.brighthub.com/office/finance/articles/18893.aspxMon, 21 Sep 2009 19:07:45 GMTb133e95a-c263-4882-8f2a-b24547eff78e:18893johngInvestors are constantly evaluating the value of owning stock in companies. Three common ratios often help investors make decisions about market values. Investors are constantly concerned with the market value of a share of stock. Perceptions that a stock is rising prompts the purchase of stock while perceptions of a fall in price prompts selling. ...http://www.brighthub.com/office/finance/articles/18710.aspxFri, 18 Sep 2009 19:30:19 GMTb133e95a-c263-4882-8f2a-b24547eff78e:18710johngTo avoid Triple Taxation, most of the dividends received by corporations are not taxed. Read on to learn important taxation information for investors. Although corporations enjoy four main advantages over other organizational forms , one disadvantage is double taxation. Since corporations are considered entities like a person, they may own property...http://www.brighthub.com/office/finance/articles/17646.aspxThu, 03 Sep 2009 14:16:07 GMTb133e95a-c263-4882-8f2a-b24547eff78e:17646johngThe price of a security can be calculated by taking into account all future cash flows associated with the asset. The Net Present Value also takes into account the price of the asset. An investment that is expected to have a zero return is not a wise financial decision. With a return of zero, it would be better if the money were not invested at all...http://www.brighthub.com/office/finance/articles/16687.aspxThu, 03 Sep 2009 14:15:41 GMTb133e95a-c263-4882-8f2a-b24547eff78e:16687johngNews articles often discuss the effects of taxes on capital gains when a company sells a long-term investment. Investors must understand the concept of capital gains to properly value their effects on firm profitability. Corporations often invest in long-term securities for the purpose of creating value. However, long-term assets create a type of o...http://www.brighthub.com/office/finance/articles/16834.aspxThu, 03 Sep 2009 14:15:17 GMTb133e95a-c263-4882-8f2a-b24547eff78e:16834johngA perpetuity is a special case in which cash flows are expected to go on forever. Valuing a perpetuity is useful in estimating long-term cash flows. A perpetuity is an asset that is expected to give a steady stream of cash flows forever. In essence, it is an annuity whose cash flows never end. Although, perpetuities are somewhat rare, they do exist...http://www.brighthub.com/office/finance/articles/16349.aspxMon, 24 Aug 2009 14:59:32 GMTb133e95a-c263-4882-8f2a-b24547eff78e:16349johngMoney today is not the same as money tomorrow or even yesterday for that matter. The old adage “time is money” is an important concept in financial markets. Anyone who uses a credit card knows that paying off debts over a long period of time costs more than if the debt is paid off more quickly. This is because there is a cost with takin...http://www.brighthub.com/office/finance/articles/16351.aspxMon, 24 Aug 2009 14:59:00 GMTb133e95a-c263-4882-8f2a-b24547eff78e:16351johngWhen a company sells a significant asset, the proceeds are recorded as extraordinary income on the company’s financial statements. This event has two major repercussions to investors. In corporate finance, the means to accurately calculate and record the operating activities of a corporation is vital both as an internal measure of performance...http://www.brighthub.com/office/finance/articles/16345.aspxFri, 21 Aug 2009 13:35:28 GMTb133e95a-c263-4882-8f2a-b24547eff78e:16345johngIn almost all aspects of life, the largest risks have the largest payoffs. In competitive financial markets, this holds true almost universally. In life it is generally true that greater rewards are wrought through greater risk-taking. The principle of risk-return trade-off suggests that there is a strong positive relationship between the potential...http://www.brighthub.com/office/finance/articles/15541.aspxWed, 19 Aug 2009 18:00:25 GMTb133e95a-c263-4882-8f2a-b24547eff78e:15541johngMost people assume they understand the purpose of finance and the role it plays in a corporate setting. But finance deals with more than just money. The key is in the value of things. Most people manage money on a small scale such as personal or small business finance. Corporate financial management, however, is a completely different approach to m...http://www.brighthub.com/office/finance/articles/15545.aspxWed, 19 Aug 2009 17:58:50 GMTb133e95a-c263-4882-8f2a-b24547eff78e:15545johngThe Contracts Model improves upon the imperfections of other corporate models by considering that relationships among entities are not perfect. By modeling these imperfections, The Contracts Model provides a more realistic view of the corporation. The Investment-Vehicle Model is a simple representation of a corporation that assumes perfect relation...