The Book Value of a Company Is Calculated by

question 114

Multiple Choice

The book value of a company is calculated by

• A) adding the price per share to the dividends paid.
• B) subtracting its price per share from the dividends paid.
• C) subtracting the value of all the firm's assets from the value of its liabilities.
• D) subtracting the value of all the firm's liabilities from the value of its assets.

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Definitions:

Fixed Assets

Long-term tangible assets that are used in the operations of a business and are not expected to be converted to cash in the near-term.

Initial Cost

The initial expenditure involved in acquiring an asset or starting a project, before any operational or maintenance costs.

Net Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term liquidity and operational efficiency of the business.

Capital Cost Allowance (CCA)

The deduction in the Canadian tax system for depreciation of tangible property that a business uses to generate income.