A firm's value-to-book and market-to-book ratios may differ from one for a number of reasons. Discuss how a successful internally funded research and development program would create a situation where the value-to-book and market-to-book ratios differ from one
Because research and development activities are expensed when incurred under U.S. GAAP, a successful program would lead to a high amount of off-balance-sheet assets and off-balance-sheet common shareholders' equity. The off-balance-sheet assets generate income, however the shareholders' equity is understated, so ROCE will be relatively high.
You might also like to view...
A manager at General Electric is preparing a sales report presenting the results of three of GE's divisions. This report should be organized by __________.
a. time b. criteria c. component d. convention
To get to his home, A has an easement of ingress and egress over the land of B. As to the easement,
A. A has a servient tenement. B. the easement is in gross. C. the easement is an appurtenance to B. D. A has a dominant tenement.