财务管理基础 financial management 清华大学出版社20.pptVIP

Types of Common Stock Value C. Liquidating Value (per share) – The value per share if the firm’s assets are sold separately from the operating organization. This value may be less (or greater) than book value. Rarely are the two values identical. B. Book Value (per share) – Shareholders’ equity (as listed on the balance sheet) divided by the number of shares outstanding. Example of Book Value (per share) FunFinMan, Inc. Common stock ($1 par value; 100,000 shares issued and outstanding) $ 100,000 Additional paid-in capital 400,000 Retained earnings 650,000 Total shareholders’ equity $1,150,000 The book value (per share) of FunFinMan, Inc., is determined by dividing total shareholders’ equity ($1,150,000) by the shares outstanding (100,000), which yields a book value of $11.50 per share. This value is not likely to change over time from normal day-to-day operations. Types of Common Stock Value This value is usually greater than book value (per share), but can occasionally be less than book value (per share) for firms that have been, are or expected to be in financial difficulties. Rarely are the two values identical. Market value (per share) may be difficult to obtain from thinly traded securities. D. Market Value (per share) – The current price at which the stock is currently trading. Types of Common Stock Value Typically, the shares of new companies are traded in the over-the-counter (OTC) market, where dealers maintain an inventory of the stock to provide additional liquidity. D. Market Value (per share) – continued. Rights of Common Shareholders Right to Income – entitled to share in the earnings of the company only if cash dividends are paid (via approval by the board of directors). Right to Purchase New Shares (Maybe) – the corporate charter of state statute may provide current shareholders with a preemptive right, which requires that these shareholders be first offered any new issue of common stock or an issue that can be