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FNT1_Chap14 (11) - Horngren Mozilla Firefox file Edit...

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Unformatted text preview: ': Horngren - Mozilla Firefox file Edit flew fl' (3' x L’rlr ? '.'Vt}'keméivslaléstmuw;awa'tio£-Wg mg] mmms-m'cciwsble emu-data 7 I Westemtwéflémmaosmm Q I I] Horngren 9 I. History fiookmarks Iools flelp l D http:n'wpscms.pearsoncmg.tomlwpsl'mediaiohjettsfsT16!6877765fhha08_flash_maln.html?thapter=null&page=745&anchory=null&pstart=null& fin ' .3 v: 779923 p Horngrefl Accounting, 8th edition Cu nte nts } Book Value per Share of Common Stock Book value per share of common stock is common equity divided by the number of common shares outstanding. Common equity equals total stockholders' equity less preferred equity. Greg‘s has no preferred stock outstanding. Its houk-vaiue-per- share—of—common-stock ratios follow. [Note that 10,000 shares of common stock were outstanding.) Bmk Value per Share of Greg’s Groovy Tunes’ Common Stock Formula 2012 201 1 Total Book value stockholders: - 1’33? per share of = equity $356,000 — $0 2 $35.50 $320,000— $0 = $3100 common stock Number of shares 10,000 10,000 of common stock outsmnding Many experts argue that book value is not useful for investment analysis. It bears no relationship to market value and provides little information beyond stock- holders’ cqmty reported on the balance sheet. But some investors base their invest— ment decisions on book value. For example, some investors rank stocks on the basis of the ratio of market price to book vaiue. To dnese inthors, the lower the ratio1 the more attractive the stack. ...
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