23BP Landers Nursery and Garden Store... [FREE SOLUTION]

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Foundations Of Financial Management

Stanley B. Block, Geoffrey A. Hirt, Bartley Danielsen

Business Studies

16th Edition 路 768 pages

ISBN: 9781259277160

Chapter 2: 23BP (page 52)

Landers Nursery and Garden Stores has current assets of $220,000 and fixed assets of $170,000. Current liabilities are $80,000 and long-term liabilities are $140,000. There is $40,000 in preferred stock outstanding and the firm has
issued 25,000 shares of common stock. Compute book value (net worth)
per share.

Short Answer

Expert verified

The book value per share of Landers Nursery and Garden Stores is $5.2.

Step by step solution

Total assets of Landers Nursery and Garden Stores

$T o t a l a s s e t s = C u r r e n t a s s e t s + F i x e d a s s e t s = $ 220, 000 + $ 170, 000 = $ 390, 000$

Total liabilities of Landers Nursery and Garden Stores

$T o t a l l i a b l i t y = C u r r e n t l i a b i l i t y + L o n g - t e r m l i a b i l i t y + P r e f e r e n c e S h a r e s = $ 80, 000 + $ 140, 000 + $ 40, 000 = $ 260, 000$

Book value per share of Landers Nursery and Garden Stores

$B o o k v a l u e p e r s h a r e = \frac{T o t a l a s s e t s - T o t a l l i a b i l i t i e s}{N o . o f s h a r e s} = \frac{$ 390, 000 - $ 260, 000}{$ 25, 000} = 5.2$

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	20X1	20X2
Sales	\(3,230,000	\)3,370,000
Cost of goods sold	2,130,000	2,850,000
Gross profits	\(1,100,000	\)520,000
Selling and administrative expenses	298,000	227,000
Operating profits	\(802,000	\)293,000
Interest expense	47,200	51,600
Income before taxes	\(754,800	\)241,400
Taxes (35%)	264,180	84,490
Income after tax	\(490,620	\)156,910

Times mirror and glass company
Sales	\)126,000
Less: Cost of goods sold	93,000
Gross profit	\(33,000
Less: selling and administrative expenses	11,000
Lease Expenses	4,000
Operating profit*	\)18,000
Less: Interest expenses	3,000
Earning before taxes	\(15,000
Less: Taxes (30%)	4,500
Earning after taxes	\)10,500

Cash	\)163,000
Accounts receivable	889,000
Inventory	411,000
New plant and equipment	520,000
Total assets	$1,983,000

	Allstate trucking	Industry
Return on sales	3%	8%
Return on assets	15%	10%

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Short Answer

Step by step solution

Total assets of Landers Nursery and Garden Stores

Total liabilities of Landers Nursery and Garden Stores

Book value per share of Landers Nursery and Garden Stores

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