Book Value per Share

Question 1

What is the assumption in BVPS?

Answer 1

• company is to be liquidated
• Assets will be realized by BV

Question 2

Formula of BVPS

Answer 2

of Outstanding Shares

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

Question 3

How to allocate Total SHE?

What is the Treatment of Subscription Receivable?

Answer 3

Solve first → Preference Share
Residual → Ordinary Share

Subscription Receivable → not deducted

Question 4

How to solve for preference share?

What are the inclusions?

Answer 4

1. Liquidation Value = Par Value + Liquidation Premium
2. Preference Dividends (that are unpaid)
   - Cumulative → all dividends in arrears
   - Non Cumulative → current year only

Dividend in Arrears = already includes current year

Question 5

Participating vs Nonparticipating

Answer 5

Participating → additional dividends (share with OS)