Ratios: Average Price

Consider a firm with 1,000 common shares, $1,000 in the common stock account, $20,000 in the paid-in capital account, and $100,000 in retained earnings and $20,000 in the preferred stock account.

What was the average sale price of the common stock?

The average sale price of the common stock = ((the common stock account+the paid in capital)/(the number of common shares))

(($1000+$20000)/(1000)) = $ 21

You can find details on the relationships between all the elements of the owner equity section on this page. Just head down to the "Owner Equity" video.

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