The Holtzman Corporation has assets of $410,000, current liabilities of $69,000,
ID: 2449455 • Letter: T
Question
The Holtzman Corporation has assets of $410,000, current liabilities of $69,000, and long-term liabilities of $89,000. There is $37,500 in preferred stock outstanding; 20,000 shares of common stock have been issued. a. Compute book value (net worth) per share. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Book value per share $ b. If there is $33,600 in earnings available to common stockholders, and Holtzman’s stock has a P/E of 22 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.) Current price $ 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.)
Explanation / Answer
Assets 410000 Less: Current Liabilities -69000 Less: Long Term Liabilities -89000 Less: Prefered Stock Outstanding -37500 Common Stock 214500 Number of Common stock issued 20000 Book Value per share: 214500/20000 $10.73 Earnings Available to common stock Holder 33600 Number of Common stock issued 20000 Earning per share 1.68 Price Earning Ratio 22 Current Price of Stock: EPS*PE: 1.68*22 $36.96 Ratio of Market Value per share to book value per share Market Value/Book Value: 36.96/10.73 3.4 Ratio 3.4: 1
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