Total Assets $800,000Current Liabilities $150,000Long-term Liabilities

QUESTION

Total Assets $800,000Current Liabilities $150,000Long-term Liabilities $120,000Preffered Stock Obligation $65,000# of common stock outstanding 30,000Earnings available to common $48,000P/E Ratio 20My answer to the solutionTotal Assets $800,000Current Liabilities $150,000Long-term Liabilities $120,00
Book value per share is (Assets minus liabilities- preferred)/common shares outstanding). 800,000-150,000-120,000-65,000= 465,000/30,000= $15.50 per share. Earnings available to common /common outstanding = earnings per share

000/30,000= $1.60 per share P/E ratio given at 20 So stock price = EPS* P/E ratio 1.60*20= $32 per share. Market to book value would be $32/$15.50= 2.06

ANSWER:

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