Question

At year​ end, Rebos​ Company's financial statements showed sales of​ $820 million, net income of​ $425 million, total assets of​ $750 million, total liabilities​ (including preferred​ stock) of​ $735 million, and 1.20 million shares of common stock outstanding. Rebos has been offered​ $742.50 million to sell their assets. Based on this​ information, calculate the​ company's book value per share and liquidation value per share of common​ stock, respectively.

Answer 1

total sales $820 million

net income $425 million

total assets $750 million

total liabilities $735

1.2 million outstanding common stocks

an offer was made to buy their assets at $742.5 million

company's book value per share:

= (total assets - total liabilities) / total number of outstanding common stocks

= ($750,000,000 - $735,000,000) / 1,200,000 = $12.50 per stock

company's liquidation value per share:

= (total offer - total liabilities) / total number of outstanding common stocks

= ($742,500,000 - $735,000,000) / 1,200,000 = $6.25 per stock