Book value is calculated by:
A) dividing total preferred equity less dividends in arrears by the number of preferred shares outstanding
B) dividing total shareholders' equity less preferred shareholders' equity by the number of common shares outstanding
C) dividing total preferred equity plus dividends in arrears by the number of common shares outstanding
D) dividing total shareholders' equity by the number of common shares outstanding

Question

Quizplus · Accepted Answer

Book value is the difference between total assets and total liabilities, as represented by shareholders' equity. The formula for calculating book value per common share is to subtract the preferred stock from total shareholders' equity, and divide the result by the number of common shares outstanding. Therefore, choice B is correct.

Book Value Is Calculated By