Amigo Software, Inc., has total assets of $834,000, current liabilities of $197,

Question

Amigo Software, Inc., has total assets of $834,000, current liabilities of $197,000, and long-term liabilities of $162,000. There is $119,000 in preferred stock outstanding. Thirty thousand shares of common stock have been issued.

Compute book value (net worth) per share

(b) If there is $55,900 in earnings available to common stockholders and the firm%u2019s stock has a P/E of 20 times earnings per share, what is the current price of the stock?

What is the ratio of market value per share to book value per share?

Compute book value (net worth) per share

Explanation / Answer

Net worth for shares = 834000 - 197000 - 162000 - 119000 = 356,000

a) Book value per shares = 356,000 / 30,000 = $11.87 per share

b) current price is 55900 * 20 / 30,000 = $37.27

c) Market value / book value = 37.27 / 11.87 = 3.14

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