The formula for computing book value per share of common stock is
A)market price per share of common stock/earning per share.
B)annual dividend per share of common stock/market price per share of common stock.
C)(net income - preferred dividends)/number of shares of common stock outstanding.
D)(total stockholders' equity - preferred equity)/number of shares of common stock outstanding.

Question

Quizplus · Accepted Answer

Book value is the difference between total assets and total liabilities of a company, attributable to common equity shareholders. To calculate the book value per share, we divide the total common equity by the number of outstanding shares. Hence, the formula for computing book value per share of common stock is (total stockholders' equity - preferred equity) divided by the number of shares of common stock outstanding (D).

The Formula for Computing Book Value Per Share of Common