Question

One measure of a corporation's intrinsic value is its book value per share. When performing this computation, which of the following must be taken into consideration?

a.Goodwill
b.Long-term debt
c.Retained earnings
d.Par value of the preferred stock

Answer 1

The book value per share calculation must account for long-term debt, retained earnings, and the par value of preferred stock, but not goodwill.

Step-by-step explanation:

When computing the book value per share of a corporation, it's important to take certain elements of the company's financial statements into account. Included in these considerations are items like long-term debt, retained earnings, and the par value of the preferred stock. Goodwill, on the other hand, is an intangible asset that does not typically factor into the calculation of book value per share. The book value per share is calculated by taking the total equity of a company (excluding preferred shares) and dividing it by the number of outstanding common shares.