Question 1: Company X is presumably doing well. The corporation's balance sheet last September 31 can be summarized as follows:
Total Assets $6,000,000
Total Liabilities $2,000,000
Stockholder's equity:
Common stock: 1,500,000 shares
of $1.00 par value shares issued
andoutstanding $1,500,000
Retained Earnings $3,000,000
Total Stockholders' equity $4,500,000
Total Liabilities & Stockholders'
Equity $6,500,000
Net Income last year was $.5 million. The common stock is currently selling for $11.00 per share.
Compute the following and show the formula:
- Book value of the corporation.
- Book value per share.
- Value of the corporation if earnings are capitalized at 200.
- Capitalized value per share.
- Market value of the entire corporation.
Question 2: When Lydia started her vending machine business, she instituted flexible budgeting for the first few months of operations. Her first monthly budget numbers were these:
Cost of goods sold 200 of sales
Advertising l5% of sales
Salaries $4,000
Delivery expense 2% of sales
Rent $1,000
Insurance $200
Supplies 5% of sales
Telephone $150
Compute and list the budget figures for September, when sales were $50,000.