What Happens to Enterprise Value If a Company Raises $100

question 25

Multiple Choice

What happens to enterprise value if a company raises $100.0m debt and holds it on its balance sheet as cash?

• A)EV remains the same
• B)EV increases by $100.0m
• C)EV decreases by $100.0m
• D)EV decreases by $200.0m

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Definitions:

Fair Value Option

An accounting approach allowing companies to choose to measure certain financial assets and liabilities at fair market prices.

Reporting Requirements

These refer to the specific guidelines or regulations that entities must follow when preparing and presenting their financial and operational information to regulatory bodies or the public.

Financial Statement Disclosures

Refers to the requirement for organizations to provide additional context, data, and explanations within their financial statements, helping stakeholders understand the financial health and decisions of the entity.

Equity Method

An accounting technique used by firms to account for their investments in other companies when they hold significant influence but not full control.