Book Value Per Share Sample Problems

For example intangible factors affect the value of a company s shares and are left out when calculating the bvps.

Book value per share sample problems. 5 cumulative preference share capital par value p100. In contrast to book value the market price reflects the future growth potential of the company. 1 776 000 100 000 shares 17 76 per share of common stock 2.

The shareholder s equity of endless company on december 31 2013 showed the following balances. 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. Calculate book value per share from the following stockholders equity section of a company.

This example is referred to as price to book value p b in which book value per share is used in the denominator. Book value per share problems 1. Bsa 2102 intermediate accounting 1 2 book value per share problem 1 abra company reported the following shareholders equity at year end.

Drawbacks of book value per share. 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. Compute the book value per ordinary share and book.

Problem 9be from chapter 11. After such modification we get the following widely used formula to calculate book value per share. 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.

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. If company has issued common as well as preferred stock. The impact on decision makers 7th edition edit edition.