Question

The balance sheet for Levy Corp. is shown here in market value terms. There are 12,000 shares of stock outstanding. Market Value Balance Sheet

Cash $ 55,000
Fixed assets 410,000
Total $ 465,000
Equity $ 465,000
Total $ 465,000
Instead of a dividend of $1.90 per share, the Levy has announced it will repurchase $22,800 worth of stock. How many shares will be outstanding after the repurchase? (Do not round intermediate calculations. Round the answer to the
the nearest whole number.)
Shares outstanding
What will the price per share be after the repurchase? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.)
New stock price $

Answer 1

The question deals with elements of a market value balance sheet and stock valuation, including the use of leverage and the calculation of a bank's net worth.

Step-by-step explanation:

Creating or understanding a market value balance sheet involves assessing a company's financial position by considering the market values of its assets, liabilities, and equity. This process requires a deep understanding of business finance and accounting principles. Leverage, or the use of debt to finance operations, plays a crucial role in shaping the balance sheet.

To calculate a new stock price, one must analyze the company's market capitalization and the number of shares outstanding. Market capitalization is derived by multiplying the stock price by the total number of shares. This information is vital for investors evaluating the value and potential return on investment.

Additionally, the concept of voting power in a corporation is tied to share distribution. Understanding how shares are divided among stakeholders is essential for assessing control and decision-making within the company.

On the banking front, a T-account balance sheet offers a snapshot of a bank's financial position, detailing assets, liabilities, and equity. Calculating net worth involves subtracting total liabilities from total assets. This figure represents the bank's equity, indicating its residual value after meeting obligations.

In summary, comprehending market value balance sheets, stock pricing based on shares outstanding, and bank T-account balance sheets requires a multifaceted understanding of finance and accounting. Investors and financial analysts leverage these tools to make informed decisions, while businesses and banks utilize them to assess their financial health and strategize for the future.