Fact Pattern: Bull & Bear Investment Banking is working with the management of Clark, Inc., in order to take the company public in an initial public offering. Selected financial information for Clark is as follows.

Long-term debt (8% interest rate)	$10,000,000
Common equity:
Par value ($1 per share)	3,000,000
Additional paid-in-capital	24,000,000
Retained earnings	6,000,000
Total assets	55,000,000
Net income	3,750,000
Dividend (annual)	1,500,000

If public companies in Clarks industry are trading at a market to book ratio of 1.5, what is the estimated value per share of Clark?

**QUESTION BELOW**

Why are the amounts for net income and dividends being ignored in the calculation for retained earnings? How are we supposed to determine when to take the stated retained earnings balance as final rather than incorporating net income less dividends?