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Financial Statement Analysis

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Financial Statement Analysis-FIN621
VU
Lesson-40
STOCKHOLDERS' EQUITY SECTION OF THE BALANCE SHEET
Stockholders' equity
Rs.6 preferred stock, Rs.100 par value, callable at 102,
Rs.102, 200,000
Shared authorized
Rs. 12, 000,000
Common stock Rs.5 par value, 5,000,000 shares authorized:
Issued
Rs.10, 000,000
Subscribed
Rs. 4,000,000
Rs. 14,000,000
Additional paid-in-capital:
Preferred
Rs.360, 000
Common (including subscribed shares)
30,800,000
Rs. 31,160,000
Retained earnings
Rs. 2,680,000
Total stockholders' equity
Rs.59, 840,000
I) No of preferred shares issued
= Rs.12, 000,000(total par value) = 120,000 shares
Rs.100 (par value per share)
II) Annual divided requirement on outstanding preferred stock =
120,000 (no of shares) x 6(dividend per share)
= Rs.720, 000
III) Common shares issued and subscribed
= Rs.14, 000,000 (total par value) = 2,800,000 shares.
Rs.5 (par value per share)
IV) Average price per common share received by the business
= 14,000,000(total par value)+ 30,800,000 (additional paid-in-capital)
2,800,000 (shares issued and subscribed)
= 44,800,000 = Rs.16
2,800,000
v)
Amount per common share due from subscribes
= 7,200,000 (subscription receivable)  = Rs.9
800,000 shares subscribed
i.e.
4,000,000 per value of subscribed shares = 800,000
5, par value of share
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Financial Statement Analysis-FIN621
VU
v)
Total legal capital = 12,000,000 (preferred) +14,000,000 (common) = Rs.26, 000,000
vii)
Total paid-in-capital = Total legal capital + additional paid-in-capital.
= 26,000,000 + 31,160,000
= 57,160,000
viii)
Book value per common share = Common stock equity
Total common share
= Total stockholders' equity ­ claim of preferred stockholders at callable price
2,800,000
= 59,840,000 ­ (120,000 shares x 102 callable price)
2,800,000
= 59,840,000 ­ 12,240,000
2,800,000
= 47,600,000/2,800,000
= Rs.17
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