Question

The table below contains data on Fincorp Inc. The balance sheet items correspond to values at...

The table below contains data on Fincorp Inc. The balance sheet items correspond to values at year-end 2018 and 2019, while the income statement items correspond to revenues or expenses during the year ending in either 2018 or 2019. All values are in thousands of dollars. 2018 2019 Revenue $ 5,700 $ 5,800 Cost of goods sold 1,600 1,700 Depreciation 430 450 Inventories 350 405 Administrative expenses 500 550 Interest expense 120 120 Federal and state taxes* 920 940 Accounts payable 260 335 Accounts receivable 450 490 Net fixed assets† 5,800 6,490 Long-term debt 2,000 2,320 Notes payable 820 490 Dividends paid 350 350 Cash and marketable securities 760 370 * Taxes are paid in their entirety in the year that the tax obligation is incurred. † Net fixed assets are fixed assets net of accumulated depreciation since the asset was installed. Suppose that the market value (in thousands of dollars) of Fincorp's fixed assets in 2019 is $6,745 and that the value of its long-term debt is only $2,120. In addition, the consensus among investors is that Fincorp’s past investments in developing the skills of its employees are worth $2,200. This investment of course does not show up on the balance sheet. What will be the price per share of Fincorp stock? (Assume 581,000 shares of stock outstanding.) (Round your answer to 2 decimal places.)

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Answer #1
Price Per Share of Fincorp Stock
= Market Value of Equity of Fincorp Inc of 2019 / No of Shares Outstanding
Where,
Market Value of Equity
= Market Value of Fixed Assets + Value of skills of employees
+ Accounts Receivable + Cash & Marketable securities - Accounts Payable
- Market Value of long Term Debt - Notes Payable
= $6745000 + $2200000 + $490000 + $370000 - $335000 - $2120000 - $490000
= $6860000
So,
Price Per Share of Fincorp Stock
= Market Value of Equity of Fincorp Inc of 2019 / No of Shares Outstanding
= $6860000 / 581000
= $11.81
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