A friend has emailed you asking for advice. She says. “We have been left some money and am interested in using some of it to invest in a few companies we are familiar with.We have looked at their annual reports and note that the total equity figure in the balance sheet is often very different to the total value of their shares on the market. Can you explain why this might be so please? We always thought that balance sheets showed the value of the business so we are now rather confused. “ Required Write a reply briefly to your friend explaining, with examples, why the equity of a company as shown by the balance sheet might be different to the market capitalization of the company.
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