Smolira Golf Corp. has 20,000 shares of common stock outstanding, and the market

Question

Smolira Golf Corp. has 20,000 shares of common stock outstanding, and the market price for a share of stock at the end of 2015 was $24.

What is the price-earnings ratio? (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.)

What is the market-to-book ratio at the end of 2015? (Round your answer to 2 decimal places, e.g., 32.16.)

If the company’s growth rate is 9 percent, what is the PEG ratio? (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.)

Explanation / Answer

=Solution, We have

Number (No. of Shares) = 20,000

Earning after tax = $ 45,774

NOW, We have

Earning per share (EPS)= Earning after tax / No. of shares

= 45774 / 20000 = $ 2.29 per share

Then we have,

Price Earning Ratio = Market price per share / Earning per Share

= 24 / 2.29 = 10.48 times.

Now, For Dividend per Share

We have, Dividend = 25000

Then we have,

Dividend per Share = Dividend / No. of Share

= 25000 / 20000 = 1.25 per Share

Similarly we have,

Here, Book Value = Owners’ equity = $ 290,000

Then we have,

Book Ratio = Book Value / No. of Share = 290000 / 20000 = $ 14.50 per share

Then,

Market to book ratio is given by, = Market Price per Share / Book Ratio

= 24 / 14.50

= 1.66 times.

Now for PEG Ratio,

we have PE Ratio = 10.48 times

And Growth Rate = 9 %

Then we have

PEG Ratio = PE Ratio/Growth Rate

= 10.48 / +9%

= 1.16 times   

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