Question

1.Book value per common share reflects the amount of stockholders equity applicable common shares on a...

1.Book value per common share reflects the amount of stockholders equity applicable common shares on a per share basis. T F

2.The price earnings ratio never reveals information about the stock markets expectations for a company's future growth in earnings. T F

3.A corporations reacquired shares are never referred to as treasury stock. T F


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Answer #1

1. TRUE

Book value per common share reflects the amount of stockholders equity applicable common shares on a per share basis. The equity of preferred stockholder's is subtracted from the stockholder's equity before arriving at the book value per common share.

2. FALSE

The price earnings ratio (PE Ratio) reveals information about the stock markets expectations for a company's future growth in earnings. A high PE ratio indicates that the market price of the share is high in comparison to the earnings of the company. It suggests that the company is overvalued and there are high growth rates for the company in future.

3. FALSE

A corporations reacquired shares are referred to as treasury shares. After the company reacquires its shares or treasury shares, the total number of outstanding shares of the company decreases.

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