Prairie Sky Software reports total shareholders’ equity of 3,450,000, including 500,000 of preferred share capital. Preferred dividends of $40,000 are in arrears. There are 300,000 common shares outstanding (400,000 authorised). Compute the equity attributable to common shareholders and the book value per common share (to the cent).
Prairie Sky Software reports total shareholders’ equity of 3,450,000, including 500,000 of preferred share capital. Preferred dividends of $40,000 are in arrears. There are 300,000 common shares outstanding (400,000 authorised). Compute the equity attributable to common shareholders and the book value per common share (to the cent).
Answer
Common equity → 2910000 · Book value per share → 9.7
Cells - Common equity · ±0 - Book value per share · ±0.01 Common equity = 3,450,000 − 500,000 − 40,000 = 2,910,000. BVPS = 2,910,000 ÷ 300,000 shares OUTSTANDING = $9.70. The 400,000 authorised is a distractor; authorised shares have no claim on equity.
Lyryx Intro FA §10.5; Bigel §7.4; Lyryx IFA Vol 2 §18.5