Book Value per Share

Question 1

Formula of BVPS

Answer 1

of Outstanding Shares

Total SHE
———————————–
No. of Outstanding Shares

Question 2

How to allocate Total SHE?

What is the Treatment of Subscription Receivable?

Answer 2

Residual Equity Theory

First, to Preference
Residual, to Ordinary

Subscription Receivable → not deducted

Question 3

Purpose of BVPS

Answer 3

to compute for amount paid to each shareholder assuming the company is liquidated

Question 4

Treatment for Liquidation Premium

Answer 4

Liquidation Value > Par Value

deducted from excess over par

Question 5

Participating vs Nonparticipating

Answer 5

Participating → share in excess over par (additional dividends)