Question

the stockholders equity of a firm:

a) is usually the same as the firm market value

b) is based on current assets cost

c) is based on current liabilities

d) none of the above

Answer 1

Stockholders Equity means the total Equity investment made by the stockholders in the company. This value comprises of the total common stock as well as preferred stock. This is not related to the current assets or the current liabilities as they are the other part of the balance sheet which is Also included.

Also the market value of the firm is the worth of the company which the investors think the company holds. This is calculated by multiplying the outstanding shares with the current market price of the shares.

Stockholders Equity is calculated by multiplying the outstanding shares with the issued value of the shares.

Therefore the correct option is D i.e None of the above.

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