Book Value per Share

Question 1

This is the amount that would be paid on each share assuming the entity is liquidated and the amount available to shareholders is exactly the same amount reported as shareholders’ equity.

Answer 1

Book value per share

Question 2

What is the formula for BV per share where there is only one class of share capital?

Answer 2

Total SHE/Number of shares outstanding

Question 3

Where there are two classes of share capital, what is the formula for BV per share?

Answer 3

Preference SHE/Number of preference shares outstanding

Ordinary SHE/Number of ordinary shares outstanding

Question 4

How do you get the ordinary shareholders’ equity?

Answer 4

Total SHE - Preference SHE

Question 5

For purposes of book value computation, treasury shares shall be treated as?

Answer 5

Retired

Question 6

Where is gain on retirement of treasury shares credited to?

Answer 6

Share premium

Question 7

Where is loss on retirement of treasury shares credited to?

Answer 7

1. Share premium
2. RE

Question 8

This is the amount which the preference shareholders normally receive upon the liquidation of the corporation.

Answer 8

Liquidation value/price

Question 9

In the absence of liquidation value, the preference shareholders shall receive an amount equal to the?

Answer 9

Par value

Question 9

True or False: The liquidation value may not be more than the par value.

Answer 9

False. It may be more than the par value.

Question 10

This is the amount paid to preference shareholders upon redemption of preference shares during the lifetime of the corporation.

Answer 10

Call price

Question 11

True or False: Preference as to dividends means that the preference shareholders have an absolute right to dividends.

Answer 11

False.

Question 12

What are the categories of dividend rights when preference share has preference to dividends?

Answer 12

Noncumulative
Cumulative
Nonparticipating
Participating

Question 13

This is one which the right to receive dividends is forfeited in any one year in which the dividends are not declared. Thus, the preference share is entitled only to current year dividends.

Answer 13

Noncumulative preference share

Question 14

This is one on which any undeclared dividends accumulate each year until paid. This, the preference share is entitled to all dividends in arrears.

Answer 14

Cumulative preference share

Question 15

This is one that is entitled to receive only the dividends equal to the fixed rate.

Answer 15

Nonparticipating preference share

Question 16

This is one which is entitled to receive dividends in excess of the basic or fixed rate.

Answer 16

Participating preference share

Question 17

True or False: Before the preference share can participate, the ordinary share should receive first an amount equal to the basic preference rate.

Answer 17

True

Question 18

In the absence of specific designation, preference share is assumed to be?

Answer 18

Noncumulative and nonparticipating

Question 19

True or False: Dividends in arrears usually include current dividends.

Answer 19

True

Question 20

In case where there are two classes of preference shares with different dividend rates and both are participating, which rate shall be the basis of allocation to the ordinary share?

Answer 20

Lower rate

Question 21

This is the excess of the liquidation value over the par value of the preference share.

Answer 21

Liquidation premium

Question 22

Can dividends be declared if there is a deficit?

Answer 22

No

Question 23

In the absence of an ordinary dividend rate, what rate is used?

Answer 23

The preference rate if the preference share is fully participating