Book Value per Share represents the per share amount for the common stockholders that would result if the company were to be liquidated at the amounts that are reported on the company’s balance sheet. Book Value per Share is total assets minus all liabilities and claims of securities that are senior to the common stock (i.e., take priority over common stockholders’ claims), such as preferred stock, divided by the number of common shares outstanding. The problem gives the total stockholders’ equity (common and preferred) at the end of 2000 , but it asks for the book value per share at the end of 2001 . So it is necessary to first, calculate the total common equity as of the end of 2000, and then adjust it for the transactions that occurred during 2001 to come up with common stockholders’ equity at the end of 2001. The resulting total of common equity at the end of 2001 is then divided by the number of common shares outstanding at year-end 2001 to calculate book value per share. Total shareholders’ equity at the end of 2000 was $24,209,306. We subtract preferred equity of $3,554,405 from that to calculate common equity of $20,654,901 at the end of 2000. Next, we need to adjust that figure for the net income received (an increase) and for all of the dividends paid (decreases) to calculate what common equity was at the end of 2001. So we add net income after tax of $2,861,003 and subtract preferred dividends of $223,551 and common dividends of $412,917, and the result is common equity as of year-end 2001, which is $22,879,436. To calculate book value per share at year-end 2001, $22,879,436 is divided by the number of common shares outstanding at year end of 12,195,799. The result is $1.876 or $1.88 per share.
Book Value per Share represents the per share amount for the common stockholders that would result if the company were to be liquidated at the amounts that are reported on the company's balance sheet. Book Value per Share is total assets minus all liabilities and claims of securities that are senior to the common stock (i.e., take priority over common stockholders' claims), such as preferred stock, divided by the number of common shares outstanding. The problem gives the total stockholders' equity (common and preferred) at the end of 2000 , but it asks for the book value per share at the end of 2001 . So it is necessary to first, calculate the total common equity as of the end of 2000, and then adjust it for the transactions that occurred during 2001 to come up with common stockholders’ equity at the end of 2001. The resulting total of common equity at the end of 2001 is then divided by the number of common shares outstanding at year-end 2001 to calculate book value per share. This answer results from failing to subtract the preferred stock from year-end 2000 total equity to calculate total common equity as of the end of 2000.
Book value per share represents the per share amount for the common stockholders that would result if the company were to be liquidated at the amounts that are reported on the company's balance sheet. Book value per share is total assets minus all liabilities and claims of securities that are senior to the common stock (i.e., take priority over common stockholders' claims), such as preferred stock, divided by the number of common shares outstanding. The problem gives the total stockholders' equity (common and preferred) at the end of 2000 , but it asks for the book value per share at the end of 2001 . So it is necessary to first, calculate the total common equity as of the end of 2000, and then adjust it for the transactions that occurred during 2001 to come up with common stockholders’ equity at the end of 2001. The resulting total of common equity at the end of 2001 is then divided by the number of common shares outstanding at year-end 2001 to calculate book value per share. This answer results from failing to subtract the preferred stock from year-end 2000 total equity to calculate total common equity as of the end of 2000 and also failing to subtract the common share dividends of $412,917 paid during 2001 from common equity as of year-end 2000 in calculating common equity as of year-end 2001.
Book value per share represents the per share amount for the common stockholders that would result if the company were to be liquidated at the amounts that are reported on the company's balance sheet. Book value per share is total assets minus all liabilities and claims of securities that are senior to the common stock (i.e., take priority over common stockholders' claims), such as preferred stock, divided by the number of common shares outstanding. The problem gives the total stockholders' equity (common and preferred) at the end of 2000 , but it asks for the book value per share at the end of 2001 . So it is necessary to first, calculate the total common equity as of the end of 2000, and then adjust it for the transactions that occurred during 2001 to come up with common stockholders’ equity at the end of 2001. The resulting total of common equity at the end of 2001 is then divided by the number of common shares outstanding at year-end 2001 to calculate book value per share. This answer results from failing to subtract the common share dividends of $412,917 paid during 2001 from common equity as of year-end 2000 in calculating common equity as of year-end 2001.
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