The balance sheet of Alex Bros. follows:
Of the 200,000 common shares authorized, 50,000 shares were issued for $8 each when the company began operations. There have been no common stock issuances since; 45,000 shares are currently outstanding, and 5,000 shares are held in treasury. Net income for the year just ended was $45,000. REQUIRED:
a. Compute the par value of the issued common shares.
b. Compute the book value of each common share.
c. At what average price were the treasury shares purchased?
d. Alex is considering reissuing the 5,000 treasury shares at the present market price of $10 per share. What effect would this action have on the company's debt/equity ratio, book value per outstanding share, and earnings-per-share ratio?