Question 7 5 pts Which of the following statements should we keep in mind while analyzing a balance sheet? There no room for discretion on the part of the financial manager when preparing the value of assets on the balance sheet. The assets on the balance sheet are recorded at market value. The firm is solvent (not bankrupt) only if the amount of cash on the balance sheet is greater than or equal the amount of retained earnings. The book value of a firm is generally greater than the market value when fixed assets are included. O Everything else equal, the amount of accounting leverage a firm has will decrease over time if the firm is profitable and retains a portion of its earnings. Question 8 5 pts Assume that you are the new owner of a local coffee shop. At the time of your initial investment, the coffee shop's market value equaled its book value. The purchase price included the building, the kitchen equipment, and the inventory. Which one of the following is most apt to cause the market value of your store to be lower than the book value? O a sudden and unexpected increase in inflation the replacement of old inventory items with more desirable products improvements to the surrounding area by other store owners O construction of a new restricted access highway located between the store and the surrounding residential areas O addition of a stop light at the main entrance to the store's parking lot Question 7 5 pts Which of the following statements should we keep in mind while analyzing a balance sheet? There no room for discretion on the part of the financial manager when preparing the value of assets on the balance sheet. The assets on the balance sheet are recorded at market value. The firm is solvent (not bankrupt) only if the amount of cash on the balance sheet is greater than or equal the amount of retained earnings. The book value of a firm is generally greater than the market value when fixed assets are included. O Everything else equal, the amount of accounting leverage a firm has will decrease over time if the firm is profitable and retains a portion of its earnings. Question 8 5 pts Assume that you are the new owner of a local coffee shop. At the time of your initial investment, the coffee shop's market value equaled its book value. The purchase price included the building, the kitchen equipment, and the inventory. Which one of the following is most apt to cause the market value of your store to be lower than the book value? O a sudden and unexpected increase in inflation the replacement of old inventory items with more desirable products improvements to the surrounding area by other store owners O construction of a new restricted access highway located between the store and the surrounding residential areas O addition of a stop light at the main entrance to the store's parking lot
