Some recent financial statements for Smolira Golf Corp. follow. SMOLIRA GOLF COR

Question

Some recent financial statements for Smolira Golf Corp. follow. SMOLIRA GOLF CORP. 2014 and 2015 Balance Sheets Assets Liabilities and Owners’ Equity 2014 2015 2014 2015 Current assets Current liabilities Cash $ 24,086 $ 24,500 Accounts payable $ 23,584 $ 27,500 Accounts receivable 12,848 15,600 Notes payable 15,000 11,200 Inventory 26,042 27,500 Other 11,971 18,300 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Total $ 62,976 $ 67,600 Total $ 50,555 $ 57,000 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Long-term debt $ 60,000 $ 73,000 Owners’ equity Common stock and paid-in surplus $ 44,000 $ 44,000 Accumulated retained earnings 237,116 256,000 Fixed assets -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Net plant and equipment $ 328,695 $ 362,400 Total $ 281,116 $ 300,000 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Total assets $ 391,671 $ 430,000 Total liabilities and owners’ equity $ 391,671 $ 430,000 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- SMOLIRA GOLF CORP. 2015 Income Statement Sales $ 373,473 Cost of goods sold 254,500 Depreciation 32,800 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Earnings before interest and taxes $ 86,173 Interest paid 14,700 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Taxable income $ 71,473 Taxes (40%) 28,589 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Net income $ 42,884 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Dividends $ 24,000 Retained earnings 18,884 -------------------------------------------------------------------------------- Smolira Golf Corp. has 40,000 shares of common stock outstanding, and the market price for a share of stock at the end of 2015 was $30. What is the price-earnings ratio? (Do not round intermediate calculations and round your final answer to 2 decimal places, e.g., 32.16.) Price-earnings ratio times What are the dividends per share? (Round your answer to 2 decimal places, e.g., 32.16.) Dividends per share What is the market-to-book ratio at the end of 2015? (Round your answer to 2 decimal places, e.g., 32.16.) Market-to-book ratio times If the company’s growth rate is 7 percent, what is the PEG ratio?

Explanation / Answer

Answer Samolira Golf Corp. Balance Sheets 2014 and 2015 2014 2015 2014 2015 Current assets Current Liabilities Cash 24086 24500 Account Payable 23584 27500 Accounts Receivable 12848 15600 Note Payable 15000 11200 Inventory 26042 27500 Other 11971 18300 Total 62976 67600 Total 50555 57000 Net Plant & Equip. 328695 362400 Long term debt 60000 73000 Owner's Equity 44000 44000 Retained Earning 237116 256000 Total 391671 430000 391671 430000 Samolira Golf Corp. Income Statement 2015 Sales 373473 Cost of Goods Sold 254500 Depreciation 32800 EBIT 86173 Interest Paid 14700 Taxable Income 71473 Tax @ 40% 28589 Net Income 42884 Dividend 24000 Retained Earning 18884 Earning Per Share = Net income/Outstanding Shares = 42884/40000 =1.0721 Price Earning Ratio = Market Value per share/ EPS = 30/1.0721 = 27.98 Dividend per Share Dividend paid/outstanding shares = 24000/40000 = 0.60 Book Value per share = Total Owner Equity/ outstanding shares = 281116/40000 = 7.0279 Market To Book Ratio = Price Per share/ Book value per share = 30/7.0279 = 4.27 PEG Ratio = P/E ratio/growth rate = 27.98/7% = 399.71

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