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Share Valuation for Finance Students

1. Pinnacle Company's book value per share is P125 based on total shareholders' equity of P2,500,000 and 100,000 shares issued. 2. CPA Company's book value per preference share is P100 and per ordinary share is P38.20 based on the shareholders' equity breakdown for each class. 3. BSA Company's book value per preference share is P53 based on the liquidation price, and book value per ordinary share is P50 based on the capital balances.

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Chuchi Subardiaga
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276 views2 pages

Share Valuation for Finance Students

1. Pinnacle Company's book value per share is P125 based on total shareholders' equity of P2,500,000 and 100,000 shares issued. 2. CPA Company's book value per preference share is P100 and per ordinary share is P38.20 based on the shareholders' equity breakdown for each class. 3. BSA Company's book value per preference share is P53 based on the liquidation price, and book value per ordinary share is P50 based on the capital balances.

Uploaded by

Chuchi Subardiaga
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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ILLUSTRATIVE EXAMPLES

Book Value Per Share (BVPS)

1. [One class of shares] Pinnacle Company’s year-end shareholders’ equity consists of the following:

Share capital, P10 par, 100,000 shares issued P1,000,000


Subscribed share capital 500,000
Share premium 370,000
Retained earnings 660,000
Revaluation surplus 140,000
Cumulative translation loss (100,000)
Treasury shares, at cost, 10,000 shares (70,000)
Total P2,500,000

Requirement: Compute for the book value per share.

2. [Two classes of shares] CPA Company’s year-end shareholders’ equity consists of the following:

Preference shares, 10% cumulative, P100 par, 20,000 shares P2,000,000


Ordinary share, P10 par, 100,000 shares issued 1,000,000
Retained earnings 820,000
Total P3,820,000

Dividends are in arrears for three years.

Requirement: Compute for the book value per share for each class of shares.

3. [Liquidation value] BSA Company reported the following capital balances on December 31, 2025:

Preference share capital, 12% 40,000 shares P50 par P2,000,000


Ordinary share capital, 100,000 shares P50 par 5,000,000
Share premium 2,000,000
Retained earnings 2,000,000

Assume that preference share has a liquidation price of 53 and dividends are unpaid since December
31, 2020.

Requirement: Calculate the book value per preference share and per ordinary share.
4. [Cumulative vs. noncumulative; Participating vs. nonparticipating] ABC Company provided the
following shareholders’ equity on December 31, 2025:

Preference share capital, 12% P100 par P1,000,000


Ordinary share capital, P100 4,000,000
Share premium 2,000,000
Retained earnings 1,000,000

Dividends have been paid on the preference share up to December 31, 2023.

Requirement: Compute the book value per ordinary share and per preference share under each of
the following conditions with respect to preference share:
a. Noncumulative and nonparticipating
b. Cumulative and nonparticipating
c. Cumulative and fully participating
d. Cumulative and fully participating after ordinary share receive 15%
e. Cumulative and participating up to 16%

5. [Treasury shares assumed retired] XYZ Company has an authorized share capital of 20,000 P100 par,
8% cumulative preference shares and 40,000 ordinary shares with P100 par value:

The entity reported the following shareholders’ equity on December 31, 2025:

Cumulative preference share capital 1,000,000


Ordinary share capital 2,200,000
Share premium 400,000
Retained earnings 520,000
Treasury ordinary shares – 2,000 at cost (300,000)
Total 3,820,000

Dividends on preference share are in arrears for 2024 and 2025.

Requirement: Compute book value per preference share and per ordinary share on December 31,
2025.

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