Why It Is Important To Understand The Enterprise Value Of A Company

Enterprise value is a measure of firm value that is very closely related to market capitalization.  Instead of focusing on only the market value of outstanding shares of stock, it measures the market value of outstanding shares of stock plus the market value of outstanding interest bearing debt less cash on hand. As an enrolled agent it is important to know basic concepts like enterprise value, when advising corporations on how to maximize value.  For example, it's possible to know the market capitalization of a company but we do not know the market value of its outstanding interest bearing debt. In this situation, the common practice is to use the book value of outstanding interest bearing debt less cash on hand as an approximation. 

The purpose of the EV measure is to better estimate how much it would take to buy all of the outstanding stock of a firm and also to pay off the debt. The adjustment for cash is to recognize that if we were a buyer the cash could be used immediately to buy back debt or pay a dividend.  Thus, you can think of enterprise value as another measure of liquidity of a company.  It is not only important to individual investors, but also institutional investors.

How To Decide Which Software To Use To Pass The EA Exam

If you are seriously considering taking the enrolled agent exam, the first thing you want to do is make sure you have enough time to study and prepare for the exam.  Many first-time test takers, feel that they can pass the exam on their experience alone and do not need to study for the exam.  The fact of the matter is, while many of the concepts will come easy for experienced tax professionals, how the questions are worded can be tricky and that is why you need to study for the exam.  Luckily, there are many companies that provide EA exam prep software, that you can purchase for a few hundred dollars.  For example, wiseguides ea review provides very affordable software, which covers all three sections of the ea exam.  If you spend a few days going over the test questions and taking a few practice exams, you will have a much better chance of passing the exam on your first try.

While the wiseguides ea review course, provides over a thousand questions from past exams, there are some downfalls to the software, mainly it is a bit dated and doesn't accurately reflect the official testing software.  If you don't mind paying a bit more on your exam prep, then you should look at purchasing the surgent ea review course.  The surgent ea review course is much more modern and provides an adaptive learning environment, meaning you will spend less time preparing for the exam and get more out of the time you do spend studying.  Regardless of what software or textbook you use to prepare for the enrolled agent exam, neither does any good if you don't plan and budget time to study for the exam.  Many students register for the exam, only to find that work or family obligations got in their way of studying and when it comes to test day, they have spend little or no time using the courses to prepare.