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Book Value Per Share Analysis

The document contains 7 problems analyzing the book value per share of various companies. Problem 4 calculates the book value per share of Joyce Corp to be $59.68 based on the capital structure and earnings allocated to each class of shares. Problem 5 determines the book value per ordinary share of Dixie Company to be $24.40. Problem 6 shows the calculation of book value per share under two scenarios where preference shares are preferred as to assets or dividends for Anna Company. Problem 7 calculates the book value per share of Shaina Company to be $160 for ordinary shares and $130 for preference shares.

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Jeric Torion
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47 views4 pages

Book Value Per Share Analysis

The document contains 7 problems analyzing the book value per share of various companies. Problem 4 calculates the book value per share of Joyce Corp to be $59.68 based on the capital structure and earnings allocated to each class of shares. Problem 5 determines the book value per ordinary share of Dixie Company to be $24.40. Problem 6 shows the calculation of book value per share under two scenarios where preference shares are preferred as to assets or dividends for Anna Company. Problem 7 calculates the book value per share of Shaina Company to be $160 for ordinary shares and $130 for preference shares.

Uploaded by

Jeric Torion
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Arjon T.

Fernandez
ACC 221 (7751)

BOOK VALUE PER SHARE

Let’s Analyze

Problem 4 – JOYCE CORP.

Balances 1,600,000
10% x 1,000,000 x 2 (200,000)
12% x 1,200,000 x 1 (144,000)
10% x 800,000 x 1 (80,000)
Balance-prorata 1,176,000

Share capital Fraction Allocation


10% Preference share 1,000,000 1/3 392,000
12% Preference share 1,200,000 1.2/3 470,400
Ordinary share 800,000 0.8/3 313,600
3,000,000 1,176,000

Balance 800,000
(10% x 800,000) 80,000
Prorata 313,600
Total 1,193,600
Shares outstanding 20,000
Book value per share 59.68
Problem 5 - DIXIE COMPANY

Preference share capital 2,000,000

Ordinary share capital 5,000,000

Retained earnings 400,000

Total shareholders’ equity 7,400,000

Preference shareholders’ equity:

Preference share capital 2,000,000


Preference dividend (2,000,000 x 8% x 2) 320,000

Liquidating premium (40,000 x 5) 200,000 2,520,000

Ordinary shareholders’ equity 4,880,000

Ordinary shares /200,000

Book value per ordinary share 24.40

Problem 6 – ANNA COMPANY


a. Preference share is preferred as to assets

Answer:
Preference Ordinary Excess
PAR 3,000,000 6,000,000 (1,350,000)
Pref. Divi. 3M x 1,080,000 (1,080,000)
12% x 3
BALANCE (2,430,000)
ALL TO ORD. (2,430,000) 2,430,000
TOTAL 4,080,000 3,570,000 0
NO. OF SHARES 60,000 60,000
BVPS 68 59.50
b. Preference share is preferred as to dividend

Answer:
Preference Ordinary Excess
PAR 3,000,000 6,000,000 (1,350,000)
PRO-RATA (450,000) (900,000) 1,350,000
TOTAL 2,550,000 5,100,000 0
60,000 60,000
BVPS 42.50 85.00

Problem 7 – SHAINA COMPANY


A. Preference share capital 1,000,000
Ordinary share capital 2,000,000
Subscribed ordinary share capital 1,000,000
Share premium 500,000
Retained earnings 1,200,000
Treasury shares ( 400,000)
Total SHE 5,300,000
Preference SHE:
Preference share capital 1,000,000
Preference dividends (1M*10%*3) 300,000 1,300,000
Ordinary SHE 4,000,000
Divided by shares outstanding (20k+10k-5k) 25,000
BVPS 160

B. Preference SHE 1,300,000


Divided by shares outstanding 10,000
BVPS 130

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