The correct answer is: C. increase in net worth.
Book value per share is calculated by dividing the total book value of a company’s equity by the number of outstanding shares. The book value of equity is the difference between the company’s assets and liabilities. Therefore, the growth in book value per share indicates that the company’s assets have increased more than its liabilities, or that its liabilities have decreased more than its assets. This means that the company’s net worth has increased.
A. Rise in share price is not necessarily indicative of an increase in net worth. For example, a company’s share price could rise due to speculation, even if the company’s assets and liabilities have not changed.
B. Increase in physical asset of the firm is not necessarily indicative of an increase in net worth. For example, a company could purchase a new piece of equipment, which would increase its physical assets, but it could also borrow money to finance the purchase, which would increase its liabilities.
D. Growth in reserves is not necessarily indicative of an increase in net worth. For example, a company could increase its reserves by setting aside money for future expenses, but this would not necessarily increase its assets or decrease its liabilities.