Question

assume that a company has total assets of $3.0 million, total liabilities of $1.2 million, preferred stock of $0.5 million and 5,000 shares of common stock. the book value per share of common stock is:

Answer 1

The book value per share of common stock is $0.36.

To calculate the book value per share of common stock, we need to subtract the total liabilities and preferred stock from the total assets, and then divide the result by the number of shares of common stock.

Step 1: Calculate the net assets
Net assets = Total assets - Total liabilities - Preferred stock
Net assets = $3.0 million - $1.2 million - $0.5 million
Net assets = $1.3 million

Step 2: Calculate the book value per share
Book value per share = Net assets / Number of shares of common stock
Book value per share = $1.3 million / 5,000 shares
Book value per share = $260,000 / 5,000 shares
Book value per share = $0.36

Therefore, the book value per share of common stock is $0.36.