Accounting & Business Finance: Including Business Software Reviews, Office Financing, FAQs & News

Calculating the Total Value of a Corporation: Equity

An 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.

Published by John Garger (7,665 pts

) on Dec 15, 2008 to
Accounting & Business Finance Articles

Market Value versus Book Value of Liabilities: Financial Distress

Book 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.

Published by John Garger (7,665 pts

) on Dec 15, 2008 to
Accounting & Business Finance Articles

Market Value versus Book Value of Liabilities: Time until Maturity

Just like assets, the book value of a liability can differ from its market value. Usually this discrepancy is smaller and less important.

Published by John Garger (7,665 pts

) on Dec 15, 2008 to
Accounting & Business Finance Articles

Market Value versus Book Value: Tangible and Intangible Assets

The 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.

Published by John Garger (7,665 pts

) on Dec 15, 2008 to
Accounting & Business Finance Articles

Market Value versus Book Value: Liquidity

Liquidity affects the discrepancy between the book and market value of an asset. Lower liquidity means lower value.

Published by John Garger (7,665 pts

) on Dec 15, 2008 to
Accounting & Business Finance Articles

Market Value versus Book Value: Inflation

Inflation 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.

Published by John Garger (7,665 pts

) on Dec 15, 2008 to
Accounting & Business Finance Articles

Market Value versus Book Value: Time since Acquisition

One 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.

Published by John Garger (7,665 pts

) on Dec 15, 2008 to
Accounting & Business Finance Articles

Principal-Agent Relationships: Agency Costs

When 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.

Published by John Garger (7,665 pts

) on Dec 12, 2008 to
Accounting & Business Finance Articles

Principal-Agent Relationships: Agency Problems and Moral Hazards

Conflict in principal-agent relationships, called an agency problem, results in monitoring by principals to protect their financial interests.

Published by John Garger (7,665 pts

) on Dec 12, 2008 to
Accounting & Business Finance Articles

Principal-Agent Relationships: Conflicts

Whenever 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.

Published by John Garger (7,665 pts

) on Dec 12, 2008 to
Accounting & Business Finance Articles

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Calculating the Total Value of a Corporation: Equity

Market Value versus Book Value of Liabilities: Financial Distress

Market Value versus Book Value of Liabilities: Time until Maturity

Market Value versus Book Value: Tangible and Intangible Assets

Market Value versus Book Value: Liquidity

Market Value versus Book Value: Inflation

Market Value versus Book Value: Time since Acquisition

Principal-Agent Relationships: Agency Costs

Principal-Agent Relationships: Agency Problems and Moral Hazards

Principal-Agent Relationships: Conflicts

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