Book Value Per Share Sample Problems

Book value per share problems 1. After such modification we get the following widely used formula to calculate book value per share. Book value per sharedeer company has the following amounts a.

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The shareholder s equity of endless company on december 31 2013 showed the following balances.

Book value per share sample problems. Drawbacks of book value per share. For example a company that is currently trading for 20 but has a book value of 10 is selling at twice its equity. One of the limitations of book value per share as a valuation method is that it is based on the book value and it excludes other material factors that can affect the price of a company s share.

1 776 000 100 000 shares 17 76 per share of common stock 2. If company has issued common as well as preferred stock. The firm has 40 000 shares of common stock outstanding par value of 1 00 per share.

In contrast to book value the market price reflects the future growth potential of the company. 5 cumulative preference share capital par value p100. Compute the book value per ordinary share and book.

Calculate book value per share from the following stockholders equity section of a company. It is the amount that shareholders would receive if the company dissolves realizes cash equal to the book value of its assets and pays liabilities at their book value. Preference share capital 12 100 par 1 000 000 ordinary share capital p100 4 000 000 share premium 2 000 000 retained earnings 1 000 000 dividends have been paid on the preference share up to december 31 2011.

Book value per share bvps is a measure of value of a company s common share based on book value of the shareholders equity of the company. The impact on decision makers 7th edition edit edition. I need help looking for the change in the book value per share for a company that is considering the sale of 12 000 shares of stock to finance the development of a new security product.

Bsa 2102 intermediate accounting 1 2 book value per share problem 1 abra company reported the following shareholders equity at year end. 25 000 shares issued and outstanding p2 500 000 ordinary share capital par value p35 100 000 shares issued and outstanding 3 500 000 share premium 1 250 000 retained earnings 3 000 000 dividends in. This example is referred to as price to book value p b in which book value per share is used in the denominator.