Question

Techno Corporation is the producer of popular business software. Recently, an investment service published the following per-share amounts relating to the company’s only class of stock:
Par value. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.001
Book value (estimated) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.50
Market value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $65.00

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 amounts shown for the company.
What do these amounts imply about Techno Corporation and its operations? Comment on what these amounts imply about the security of creditors’ claims against the company.



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  • CreatedApril 17, 2014
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