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you can't it shouldn't even be a company because it will go down in money from all the bills , and they will go in debt, shut down, and the company would die
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∙ 13y ago
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What does price to earnings ratio signify?
The price to earnings ratio is commonly known as the P/E. It signifies how much you pay for a stock versus how much money the company has made. For example, if a company's earnings were $1 per share and the stock price was $25 the P/E would be 25. This is sometimes referred to as valuation: The company is valued at 25 times earnings. There are many ways to value a company but the value based on the P/E is one of the easiest and most common.
Does a Balance Sheet show a companys true worth?
A Balance Sheet shows a company's Net Book Value which is the Net Worth according to their accounting practices. This is normally not the value of the company. If a company is publicly held, it will have a market value which is the value of all outstanding stock. If the company is privately held, and was offered for sale, the selling price would typically be greater than the Net Worth of the company. The value might be calculated based on projected Sales or Earnings.
What reported too small value in financial position if the company is trying to maximize its perceived value asset liabilities Retained earnings or contributed capital?
If the company is trying to maximize its perceived value, it would report a too small value for its liabilities. This is because lower liabilities would indicate lower financial risk and could make the company more attractive to investors. By understating liabilities, the company may appear to have a stronger financial position, potentially leading to a higher perceived value.
How can a company earn a large net income and have a small balance in retained earnings?
If the company started out with negative Retained Earnings, the ending balance would be less than their Net Income. Or, if the company paid out a large amount in Dividends.
What do you understand by capitalization of earnings How is the value of a firm ascertained with the help of its earnings Explain with an example?
'Capitalization Of Earnings' A method of determining the value of an organization by calculating the net present value (NPV) of expected future profits or cash flows. The capitalization of earnings estimate is done by taking the entity's future earnings and dividing them by the capitalization rate (cap rate). This will take into account the risk that earnings will stop or be lower than the estimate. Where: d = discount rate g = growth rate This is an income-valuation approach that determines the value of a business by looking at the current benefit of realizing a cash flow now, rather than in the future. The capitalization of earnings is particularly useful when the future earnings can be predicted easily and accurately. For example, if a company had a business that made $1.2 million last year and that was expected to grow at a 4% rate (plus a 3.25% inflation rate), the annual rate of return needed by a purchaser given the level of risk would be 26%. Expected value using the capitalization of earnings method would be $6.4 million, calculated as: -$1,200,000/ (0.26 - (.04+.0325)) -$1,200,000/0.1875 -$6.4 million
Justify the Need for retained earnings in Financial Management?
Retained earnings represent what a company does with its profits. They are the amount of profit the company has reinvested in the business since its inception. Retained earnings reflect a company's dividend policy. They focus on evaluating which action generated or would generate the highest return for the shareholders. Comparison of retained earnings is difficult but generally most meaningful among companies of the same age and same industry. They act both as a measure of future investments and shareholders trust to the company.
Can an organization operate without current liabilities?
I think that a company could operate without having current liabilities; however, this would be very unlikely. For a company to do this, the company would have to have a very large cash reserve, because the company would have to pay cash for everything. I do see it possible but not plausible for a company to be able to operate like this. Companies usually invest the company’s money because of the time value that money has.
What are the factors for the value of money of a country?
To answer your question, you have to go into mico & macro economics to understand it. But Mainly the answer would be, many factors, how would you value a house? how would you value a company? how would you value a share in that company? its the same concept
Why are retained earnings reported as part of shareholders' equity?
Retained earnings is part of shareholders' equity. It is considered part of equity because it represents the profits that are retained in the company to fund growth. If a company would have paid out all past profits as dividend, then total assets (cash) would be lower, and retained earnings would have a zero balance. Because net income is computed after claims of third parties (interest, wages, etc), there is no claim of third parties on profits that are retained. So, retained earnings are not a liability.
Springsteen Music Company earned 820 million last year and paid out 20 percent of earnings in dividends. By how much did the companys retained earnings increase?
I think you would take $820 x .20 = $164.00 Than you would take 820 - 164 = $656 in retained earnings....but I'm not positive
Which would be considered to be internally generated paid in capital or retained earnings?
Retained earnings is called internally generated by company as this is the profit part which earns business during fiscal year while paid in capital is the actual invested amount by share holders of company.
If surrender rate increases is this positive or negative for an insurance company's earnings?
Surrender rates go down over time. If they increased it would obviously be beneficial to the insurance company.
