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Dimeback, Inc., is obligated to pay its creditors $6305 during the year. What is the market...

Dimeback, Inc., is obligated to pay its creditors $6305 during the year. What is the market value of the shareholders’ equity if assets equal $3627?

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Answer #1

Liabilities = Obligation to Creditors
Liabilities = $6,305

Assets = $3,627

Assets = Liabilities + Shareholders’ Equity
$3,627 = $6,305 + Shareholders’ Equity
Shareholders’ Equity = -$2,678

Shareholders’ Equity cannot be negative. So, market value of shareholders’ equity is $0

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