You are given the following information for Smashville, Inc. During the year, Sm
ID: 2772398 • Letter: Y
Question
You are given the following information for Smashville, Inc.
During the year, Smashville, Inc., had 17,000 shares of stock outstanding and depreciation expense of $16,000. At the end of the year, Smashville stock sold for $39 per share. Calculate the price-book ratio, price-earnings ratio, and the price-cash flow ratio. (Do not round intermediate calculations. Round your answers to 2 decimal places.)
Cost of goods sold: $ 169,000 Investment income: $ 1,300 Net sales: $ 282,000 Operating expense: $ 44,000 Interest expense: $ 7,400 Dividends: $ 5,000 Tax rate: 30 %
Explanation / Answer
Calculation of Price-book ratio:
Cash
$ 21,000.00
Add: Other assets
$ 37,000.00
Add: Fixed assets
$ 120,000.00
Add: Investments
$ 33,000.00
Add: Operating assets
$ 64,000.00
Less: Long-term debt
$ (92,000.00)
Less: Current liabilities
$ (22,000.00)
Less: Other liabilities
$ (6,000.00)
Total Book Value
$ 155,000.00
Number of shares
17,000
Book value per share = 155000/17000
$ 9.12
Price Per share
$ 39.00
Price-book ratio = 39 / 9.12
4.28
Calculation of Price-Earnings ratio:
Investment income:
$ 1,300.00
Net sales:
$ 282,000.00
Less: Cost of goods sold:
$ (169,000.00)
Less: Operating expense:
$ (44,000.00)
Less: Interest expense:
$ (7,400.00)
Income before tax
$ 62,900.00
Less: Tax 62900*30%
$ (18,870.00)
Net Income
$ 44,030.00
Number of shares
17,000
EPS = 44030 / 17000
$ 2.59
Price Per share
$ 39.00
Price-Earnings ratio = 39 / 2.59
15.06
Calculation of Price-cash flow ratio:
Net Income
$ 44,030.00
Add: Depreciation Expense
$ 16,000.00
Cash Flows
$ 60,030.00
Number of shares
17,000
Cash Flow per share = 60030/17000
$ 3.53
Price Per share
$ 39.00
Price-cash flow ratio = 39/3.53
11.04
Calculation of Price-book ratio:
Cash
$ 21,000.00
Add: Other assets
$ 37,000.00
Add: Fixed assets
$ 120,000.00
Add: Investments
$ 33,000.00
Add: Operating assets
$ 64,000.00
Less: Long-term debt
$ (92,000.00)
Less: Current liabilities
$ (22,000.00)
Less: Other liabilities
$ (6,000.00)
Total Book Value
$ 155,000.00
Number of shares
17,000
Book value per share = 155000/17000
$ 9.12
Price Per share
$ 39.00
Price-book ratio = 39 / 9.12
4.28
Calculation of Price-Earnings ratio:
Investment income:
$ 1,300.00
Net sales:
$ 282,000.00
Less: Cost of goods sold:
$ (169,000.00)
Less: Operating expense:
$ (44,000.00)
Less: Interest expense:
$ (7,400.00)
Income before tax
$ 62,900.00
Less: Tax 62900*30%
$ (18,870.00)
Net Income
$ 44,030.00
Number of shares
17,000
EPS = 44030 / 17000
$ 2.59
Price Per share
$ 39.00
Price-Earnings ratio = 39 / 2.59
15.06
Calculation of Price-cash flow ratio:
Net Income
$ 44,030.00
Add: Depreciation Expense
$ 16,000.00
Cash Flows
$ 60,030.00
Number of shares
17,000
Cash Flow per share = 60030/17000
$ 3.53
Price Per share
$ 39.00
Price-cash flow ratio = 39/3.53
11.04
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.