Homework Answers
Based on the given information, Total assets of Holtzman Corporation= $4,55,000
Current liabilities= $66,000
Long term liabilities= $99,000
Preferred stock outstanding= $36,800
Number of common stock shares= 20,000 shares
a] Book value(net worth) per share = Total Common stock outstanding/ Number of common stock shares
Total common stock outstanding= Total assets - current liabilities - long tern liabilities - preferred stock outstanding
= $4,55,000 - $66,000 - $99,000 - $36,800
=$2,53,200
Book value per share = $2,53,200/ 20,000
= $12.66
Hence the book value per share is $12.66.
b ]Earnings available to common stockholders= $27,200
P/E= 19 times earning per share
The current price of the stock= ?
As we know, P/E ratio ( Price/ Earnings ratio) = Market value per share/ Earnings per share
19= Market value of share/ $27,200
Market price of share= $27,200 x 19
= $5,16,800
Note- Here we have the total earning and hence we get the total market price of all shares.
To calculate Market price per share,
Market price per share= Market price of all shares/ Total number of shares
= $5,16,800/ 20,000
=$ 25.84
Hence the market price per share is $25.84 and total market price of all shares is $5,16,800.
c] Market value per share to book value per share= Market value per share/ book value per share
= $25.84/ $12.66
=2.04 times
Hence the ratio of market value per share to book value per share is 2.04 times.
I have rounded off all calculations to two decimal places.
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