Question:
The Rockford Corporation has assets of $380,000, current liabilities of $40,000, and long-term liabilities of $70,000. There is $30,000 in preferred stock outstanding; 20,000 shares of common stock have been issued.
a. Compute book value (net worth) per share.
b. If there is $25,000 in earnings available to common stockholders and Rockford’s stock has a P/E of 15 times earnings per share, what is the current price of the stock?
c. What is the ratio of market value per share to book value per share?