The balance sheet of Luxury Rug Company reported the following: Redeemable preferred stock, 4%, $60 par value,

Question:

The of Luxury Rug Company reported the following:
Redeemable preferred stock, 4%, $60 par value,
redemption value $45,000; outstanding 500 shares................ $30,000
Common stockholders equity:
6,000 shares issued and outstanding...................................... 66,000
Total stockholders equity...................................................... $96,000

Requirements
1. Compute the book value per share for the , assuming all preferred dividends are fully paid up (none in arrears).
2. Compute the book value per share of the , assuming that three years cumulative preferred dividends including the current year are in arrears.
3. Luxury Rugs recently traded at a market price of $6.00 per share. Does this mean that Luxury Rugs stock is a good buy at $6.00?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Balance Sheet
Balance sheet is a statement of the financial position of a business that list all the assets, liabilities, and owner’s equity and shareholder’s equity at a particular point of time. A balance sheet is also called as a “statement of financial...