Enscoe Enterprises, Incorporated (EEI) has 240,000 shares authorized, 210,000 shares issued, and 20,000 shares of treasury stock. At this point, EEI has $1,530,000 of assets. $200,000 liabilities, $460,000 of common stock, and $870,000 of retained earnings. Further, assume that the market value of EEI's common stock is $9 per share. Required a. Determine the number of shares of stock that is outstanding. b. Determine the book value per share. c. Provide a rational explanation for the difference between the book value per share and the market value per share of EEI's common stock.
Enscoe Enterprises, Incorporated (EEI) has 240,000 shares authorized, 210,000 shares issued, and 20,000 shares of treasury stock. At this point, EEI has $1,530,000 of assets. $200,000 liabilities, $460,000 of common stock, and $870,000 of retained earnings. Further, assume that the market value of EEI's common stock is $9 per share. Required a. Determine the number of shares of stock that is outstanding. b. Determine the book value per share. c. Provide a rational explanation for the difference between the book value per share and the market value per share of EEI's common stock.
Chapter7: Common Stock: Characteristics, Valuation, And Issuance
Section: Chapter Questions
Problem 4QTD
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Enscoe Enterprises, Incorporated (EEI) has 240,000 shares authorized, 210,000 shares issued, and 20,000 shares of
Required
a. Determine the number of shares of stock that is outstanding.
b. Determine the book value per share.
c. Provide a rational explanation for the difference between the book value per share and the market value per share of EEI's common stock.
Transcribed Image Text:Provide a rational explanation for the difference between the book value per share and the market value per share of EEIs' common stock.
1. Market value is
2.
than the book value.
is a measure of historical cost, while
is a measure of current values.
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