Smolira Golf Corp. has 30,000 shares of common stock outstanding, and the market
ID: 2764374 • Letter: S
Question
Smolira Golf Corp. has 30,000 shares of common stock outstanding, and the market price for a share of stock at the end of 2015 was $47.
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 8 percent, what is the PEG ratio? (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.)
SMOLIRA GOLF CORP.
2014 and 2015 Balance Sheets Assets Liabilities and Owners’ Equity 2014 2015 2014 2015 Current assets Current liabilities Cash $ 23,086 $ 25,500 Accounts payable $ 24,584 $ 28,500 Accounts receivable 13,848 16,600 Notes payable 15,000 12,200 Inventory 27,362 28,500 Other 12,971 18,300 Total $ 64,296 $ 70,600 Total $ 52,555 $ 59,000 Long-term debt $ 55,000 $ 61,000 Owners’ equity Common stock and paid-in surplus $ 52,000 $ 52,000 Accumulated retained earnings 243,436 263,000 Fixed assets Net plant and equipment $ 338,695 $ 364,400 Total $ 295,436 $ 315,000 Total assets $ 402,991 $ 435,000 Total liabilities and owners’ equity $ 402,991 $ 435,000
Explanation / Answer
Price Earning Ratio = Market Value per Share / Earnings per Share EPS = Net Income / No of shares Outstanding = 43564 / 30000 = 1.452133 Market Value per share = $47 PE Ratio = 47/1.452133 = 32.37 times Dividends = $24000 Number of shares = 30000 Dividend per share = $24000 / 30000 = $0.80 Book Value of Assets as of 2015 = $435000 Market Value of Company = 30000 * $47 = $1,410,000 Market to Book Ratio = 1410000 / 435000 = 3.24 times PEG Ratio = P/E ratio ÷ Annual EPS Growth Growth = 8% PEG Ratio = 32.36617/8% = 404.58 times
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