Book Value Per Share Example Problems

Compute the book value per ordinary share and book.

Book value per share example problems. 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. We can apply the values to our variables and calculate the book value per share. Book value per share is a measure of the amount of equity that s available to common shareholders on a per share basis.

Bsa 2102 intermediate accounting 1 2 book value per share problem 1 abra company reported the following shareholders equity at year end. In other words it is the ratio of available common equity to the number of outstanding common shares. 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.

The numerator is the net income available for common stockholders i e net income less preferred dividend and the denominator is the average number of shares of common stock outstanding during the year. Let s break it down to identify the meaning and value of the different variables in this problem. Using the previous example assume that the company repurchases 500 000 common stocks from its shareholders.

Book value per share problems 1. 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. Earnings per share ratio eps ratio is computed by the following formula.

Still it can be trading in the market at rs 70 discount to book value. It means if the company xyz is out of business and is liquidated today will leave rs 100 to all its share holder. It will reduce the current shares outstanding to 2 5 million 3 000 000 500 000.

The presence of preferred stock in the total stockholders equity however has a significant impact on the calculation. What would the book value per share be. Company xyz has a book value of rs 100.