Mini Case # 1

The balance sheet for ABC corporation for 2021 is given below:

ABC Corporation -

December 31, 2021 (all in $1,000)

Assets

Cash 40

Marketable Securities 60

Accounts Receivables 120

Inventories 160

Total Current Assets 380

Land and Buildings (Net) 150

Equipment (Net) 250

Total Fixed Assets 400

Total Assets 780

Liabilities and Shareholders Equity:

Accounts Payable 100

Line of credit 30

Accrued Wages 30

Total Current Liabilities 160

Long term debt 180

Preferred Shares 80

Common Shares 360

Liabilities and Shareholders Equity: 780

Other Information:

1. Preferred shares will be redeemed at 50% of their stated value

2. Accounts Receivables and Inventories can be liquidated at 130% of book value

3. ABC has 100,000 common shares outstanding

4. All dividends and interest owed are currently paid

5. Land and Buildings can be liquidated at 130 % of the book value

6. Equipment can be liquidated for 60% of their book value

7.Cash and Marketable securities can be liquidated at book value

8. Accounts payable and accruals will be repaid at 60% of the book value

9. The line of Credit and long-term debt will require a 75% payment on outstanding amo

Required:

a) What is the book value of ABC Corporation per share?

b) What is the liquidation value per share?

c) Briefly compare, contrast, and discuss the values found in (a) and (b)