Par, Book, and Market Values
Whitaker Video is the producer of popular video games. Recently, an investment service published the following per-share amounts relating to the company’s only class of stock:
Par value | $ 0.05 |
Book value (estimated) | 10.00 |
Market value | 96.00 |
Instructions
a. Without reference to dollar amounts, explain the nature and significance of par value, book value, and market value.
b. Comment on the relationships, if any, among the per-share accounts shown for the company. What do these amounts imply about Brain and its operations? Comment on what these amounts imply about the security of creditors’ claims against the company.
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