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Chapter 21 – Valuation of Assets, Liabilities & Stockholders Equity
The price-to-book ratio of 2.6 means that the market value of equity is more than two and a half times greater than the accounting book value of equity. This implies that there exists some significant under-valuation of assets on Stanley Works’ Balance Sheet. Examine the specific assets on Stanley Works Balance Sheet and related footnote. Based on Finkler’s discussion in Chapter 21, identify specific assets and explain why they are likely to be under-stated for accounting purposes.
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