Question

Book value is equal to: a. Assets-(Liabilities+Equity) b. Assets-(Liabilities/#of shares of common stock outstanding) c. Net...

Book value is equal to:

a. Assets-(Liabilities+Equity)

b. Assets-(Liabilities/#of shares of common stock outstanding)

c. Net worth

d. Assets/# of shares of common stock outstanding

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Answer #1

The Correct Answer is C

Book Value = Sharholders Equity = Total Assets - Total Liabilities

Now Book Value per Share = Sharholders Equity / No. of Shares Outstanding

and therfore b and d are incorrect as one needs to divide Equity /No. of Shares Outstanding to arive at book value and not assets / liabilities  

a is incorrect as the Total Assets - (Liability+ Equity) = 0

as Total Assets = Total Liabilities and Total Liabilities = Debt + Equity + Current Liabilities

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