The most recent balance sheet of infinity information Systems (IIS) shows
that the company has $35 million of common equity and 7 million shares of
common stock outstanding. The company’s common stock has a market value equal
to $8 per share. IIS’ net income was $14 million. What are IIS’ (a) P/E ratio
and (b) M/B ratio?
2. Horatio’s Hot Dogs’ current assets equal $260,000. The company’s return on assets (ROA) is 4%. Its net income is $140,000, its long-term debt equals $1,755,000, and 35% of its assets are financed with common equity. Horatio’s has no preferred stock. Compute the company’s current ratio.
