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Princeton Equity, Langford Sweets.

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Division B has a larger profit margin per dollar. 1.
Princeton Corporation has assets of $384,000, current liabilities of $54,000, and long-term liabilities of $79,000. There is $36,800 in preferred stock outstanding; 20,000 shares of common stock have been issued.
(a) Compute book value (net worth) per share. (Round your answer to 2 decimal places).
Book value per share is $................................
(b) If there is $32,800 in earnings available to common stockholders and Princeton's stock has a P/E of 19 times earnings per share, what is the current price of the stock? (Do not round intermediate calculations. Round your answer to 2 decimal places).
Current price then will be $..............................................
(c) What is the ratio of market value per share to book value per share? (Do not round intermediate calculations. Round your answer to 2 decimal places.)

2.
Langford Sweets, Inc., has two divisions. Division A has a profit of $141,000 on sales of $2,700,000. Division B is only able to make $34,000 on sales of $347,000.
(a) Compute the profit margins (return on sales) for each division. (Round your answers to 2 decimal places).
Profit margin
Division A has ..................%
Division B has .....................%
________________________________________
(b) Based on the profit margins (returns on sales), which division is superior?

Division A
Or Division B

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Solution Summary

The expert computes the book value per share. The ratio of market value is provided.

Solution provided by:
Carol Sargent, PhD
Education
  • BSc, University of Virginia
  • MSc, University of Virginia
  • PhD, Georgia State University
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