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A Firm Has a Market Value Equal to Its Book

question 19

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A firm has a market value equal to its book value. Currently,the firm has excess cash of $800 and other assets of $5,200. Equity is worth $6,000. The firm has 600 shares of stock outstanding and net income of $700. The firm has decided to spend all of its excess cash on a share repurchase program. How many shares of stock will be outstanding after the stock repurchase is completed?


Definitions:

Receivables

Money owed to a company by customers for goods or services that have been delivered or used but not yet paid for.

Ending Cash Balance

The amount of cash a company has available at the end of a financial period.

Sales

The total amount generated from selling goods or services over a specific period of time.

Accounts Receivable Period

The average number of days it takes for a company to collect payments owed by its customers.

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