BOOK VALUE

Company G is beginning to perform some ratio analysis for its bankers. It is seeking a new bank loan. It has only one Class of Common Stock, no Preferred Stock and has neither repurchased nor resold its Common Stock. Regrettably the company has just come off an unprofitable year; that also prevented it from paying any dividend. Company G believes that a higher Book Value per share will help it obtain the new bank loan.

Its Equity Section is summarized below:

Common Stock Par Value $10 per share (80,000 shares, Authorized Issued and Outstanding) $ 800,000

Common Stock Additional Paid in Capital $ 200,000

Treasury Stock $(100,000)

Retained Earnings $(300,000)

Accumulated Other Comprehensive Income (AOCI) $ 500,000

TOTAL SHAREHOLDERS EQUITY $ 1,100,000

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A. Calculate the Companys Book Value per Share?

B. In some circles, it is felt that Book Value per Share should EXCLUDE Accumulated Other Comprehensive Income (AOCI). Lets call this Adjusted Book Value per Share

i. Calculate Adjusted Book Value per Share

ii. Which ratio seems better for the purpose of obtaining a loan, Book Value per Share or Adjusted Book Value per Share, and WHY?