ASSETS CASH 000T ACCOUNT RECEIVABLE 000 INVENTORY 000 TOTAL CURRENT ASSETS 000 LIABILITIES ACCOUNT PAYABLE 000 CURRENT LONG TERM DEBT TOTAL CURRENT LIABILITIES 000T LONG TERM DEBTS 000 TOTAL LIABILITIES 1500 OWNERS EQUITY 000

ASSETS CASH 000T ACCOUNT RECEIVABLE 000 INVENTORY 000 TOTAL CURRENT ASSETS 000 LIABILITIES ACCOUNT PAYABLE 000 CURRENT LONG TERM DEBT TOTAL CURRENT LIABILITIES 000T LONG TERM DEBTS 000 TOTAL LIABILITIES 1500 OWNERS EQUITY 000

Contemporary Auditing

11th Edition

ISBN:9781337650380

Author:KNAPP

Publisher:KNAPP

Chapter5: Ethical Responsibilities Of Independent Auditors

Section5.6: Richard Grimes, Staff Accountant

Problem 1Q

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Concept explainers

Stockholder's Equity

The stockholders’ equity (often referred to as the book value of the company) is the number of assets available to the stockholder after its entire liabilities is paid off. The stockholders’ equity is also sometimes referred to as owner's equity. The stockholders’ equity or book value generally includes common stock, treasury stock retained earnings. It is an indicator of a company's financial strength and is an important item on the company's balance sheet.

Question

Gary corporation has a price to book ratio of 1.2 and have 100,000 shares outstanding. Consider the following information( in Thousands)( in attached image).

a)Calculate the stock price using the price to book ratio.

b) If their stock price is listed on the stock market at $23 , should stock holder sell or hold the stock?

ASSETS
CASH
000T
ACCOUNT RECEIVABLE
000
INVENTORY
000
TOTAL CURRENT ASSETS
000
LIABILITIES
ACCOUNT PAYABLE
000
CURRENT LONG TERM DEBT
TOTAL CURRENT LIABILITIES
000T
LONG TERM DEBTS
000
TOTAL LIABILITIES
1500
OWNERS EQUITY
000

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