Balance Sheets TABLE IC 4. 2015E 2014 2013 Assets Cash Accounts receivable Inven

Question

Balance Sheets TABLE IC 4. 2015E 2014 2013 Assets Cash Accounts receivable Inventories 7,282 632,160 1.287 360 $1,926,802 1.202,950 $ 57,600 351,200 85,63 878000 71 1,716,480 $2,680,112 1,197,160 Total current assets Gross fixed assets Less accumulated depreciation $1,124,000 491,000 146,200 S 344800 120 Net fxed assets 939,790 Total assets 3,497,152 Liabilities and Equity Accounts payable Accruals Notes payable 145,600 136,000 5 436,800 5 524,16 489,600 Total current labilities Long-term debt Common stock Retained earnings $1,144,800 1,721,176 $1,952,352 $1,650,568 723,432 460,000 481,600 323,432 460,000 203,768 663,768 231,176 Total equity ° Total liabilities and equity 4971 Note: E indicates estimated. The 2015 data are forecasts Income Statements TABLE IC4.2 2015E 2014 2013 53,432.000 Sales Cost of goods sold Other expenses Total operating costs excluding depreciation and 57035,600 5,875,992 550 519,988 047,988 116,960 $6,425,992 S 609,608 s 13,988) 209,328 18,900 s 190,428 ($ 13,988) EBITDA Depreciation & amortization 5 492,648 ($ 130,948) Interest expense 422,640 IS 266,960) $ 146,600 EBT (1" 106,784 Taxes (40%) Net income 87,960 EPS DPS Book value per share Stock price Shares outstanding Tax rate Lease payments $1014 $0.220 7809 12.17 250,000 S 1.602) 0.110 4.926 $ 225 100,000 4000% 0.880 0.220 6638 $ 8.50 100,000 40.00% oSinking fund payments Note: E indicates estimated. The 2015 data are forecasts The firm had sufficient taxable income in 2012 and 2013 to obtain its full tax e 13 to obtain its full tax refund in 2014.

Explanation / Answer

P/E RATIO FOR YEAR 2015

= MARKET PRICE PER SHARE / EPS

= $12.17 / $1.014

= 12

MARKET TO BOOK RATIO

= MARKET PRICE PER SHARE / BOOK VALUE PER SHARE

= $12.17 / $7.809

= 1.558

AS THE PE RATIO IS HIGH AND THE MARKET VALUE IS NEAR TO 1.5 TIMES OF THE BOOK PRICE THE INVESTORS ARE TO HAVE HIGH OPINION.

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