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The Holtzman Corporation has assets of $388,000, current liabilities of $74,000, and long-term liabilities of $95,000. There is $38,800 in preferred stock outstanding; 20,000 shares of common stock have been issued. a. Compute book value (net worth) per share. (Round your answer to 2 decimal places.) b. If there is $31,900 in earnings available to common stockholders, and Holtzman’s stock has a P/E of 23 times earnings per share, what is the current price of the stock? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) c. What is the ratio of market value per share to book value per share? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Respuesta :

Answer:

a.  $9.01 per share

b. $36.69

c.  4.07 : 1

Explanation:

a. For computing the book value per share, we have to apply the formula which is shown below:

= Common stock balance ÷ issued shares

In the given question, the common stock is not given so, first, we have to compute the common stock value which is shown below:

= Assets - current liabilities - long term liabilities - outstanding preference shares

= $388,000 - $74,000 - $95,000 - $38,800

= $180,200

Now put these values to the above formula

So, the answer would be equal to

=  $180,200 ÷ 20,000 shares

= $9.01 per share

b. For computing the current price of the stock, we need to apply the formula which is shown below:

= Earning per share × P/E ratio

where,

Earning per share =  Earnings available to common stockholders ÷ issued shares

= $31,900 ÷ 20,000 shares

=$1.595 per share

Now put these values to the above formula

So, the answer would be equal to

= $1.595 × 23

= $36.69

c. The ratio of market value per share to book value per share is shown below:

= Market value per share ÷ book value per share

= $36.69 ÷ $9.01

= 4.07 : 1