Problem: Amigo Software, Inc has total assets of $800,000 current liabilities of $150,000, and long-term liabilities of $120,000. There is $65,000 in preferred stock outstanding. Thirty thousand shares of common stock have been issued.
1) Compare book value (net worth) per share
2) If there is $48,000 in earnings available to common stockholders and the firm's stock has a P/E of 20 times earnings per share, what is the current price of the stock?
3) What is the ratio of market value per share to book value per share? (Round to two places to the right of the decimal point)
4) If the firm sells at 2.5 times book value per share, what will the P/E ratio be? (Round to the nearest whole number)