Question
A company issues 5,00,000 shares in the market. The
face value of each share is Rs.2, the book value is Rs.10 and the market value is Rs.15. What is the net-worth of the company?Solution
Book Value per share = Net-worth/no. of shares Therefore, Net-worth = Book value per share * no. of shares = Rs.10 * 5,00,000 = Rs.50,00,000 The product of no. of shares and face value gives the amount of issued capital. The product of no. of shares and market value gives the market capitalization of the company.
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