A company has $595,000 in total shareholders' equity. Preference shares outstanding are valued at $150,000, and 75,000 ordinary shares are outstanding. Its book value per ordinary share is $7.93.

Question

Quizplus · Accepted Answer

The book value per ordinary share is calculated by subtracting the value of preference shares from total shareholders' equity and then dividing by the number of ordinary shares. Here, ($595,000 - $150,000) / 75,000 = $5.93, not $7.93.

A Company Has $595,000 in Total Shareholders' Equity