Balance Sheet for the year ending 12/31/X0

Assets

Cash

100,000

Marketable Securities

1,262,000

Accounts Receivable

192,000

Inventory

420,000

Other Assets

150,000

Current Assets

2,124,000

Equipment

2,000,000

Accumulated Depreciation

(200,000)

Fixed Assets

1,800,000

Total Assets

3,924,000

Liabilities and Equity

Accounts Payable

154,000

Other Current Liabilities

50,000

Current Liabilities

204,000

Mortgages

0

Total Liabilities

204,000

Common Stock

100,000

Paid in Capital

3,400,000

Retained Earnings

220,000

Total Equity

3,720,000

Total Liabilities and Equity

3,924,000

Income Statement for the year ended 12/31/X0

Sales1,690,000

Cost of Goods Sold780,000

Gross Profit910,000

Operating expenses640,000

Net income before taxes270,000

Taxes86,850

Net Income183,150

The par value of the stock is $0.10 (ten cents per share). The particular exchange on which this stock is traded requires that the company have a minimum of 500,000 shares outstanding at all times.

Stock price will not go below $1.00 per share, in any year, even though you may have incurred a loss in any year.

The P/E (called the price earnings ratio: price / earnings per share {EPS}) for period X0 will be the same for the following year. Assume they issued stock in period zero and the price of the common stock is included in the financial statement information as of the end of period zero. You need to make this assumption to calculate the original P/E. Calculate P/E, EPS and stock price.