n equity)? 6. Use the following information to answer the questions: Assets Cash

Question

n equity)? 6. Use the following information to answer the questions: Assets Cash Marketable securities Accounts receiv Liabilities and Equity 14,000 Accounts payable 19,000 4,000 Notes payable 8,000 able 12,000Current liabilities 27,000 Inventory 44,000Long-term debt 74,000 Total liabilities 42,000 Paid-in capital 80,00O 107,000 30,000 Current assets Machines Assets Real estate Net fixed assets Total assets Liabilities and Equity 60,000 Retained eamings 39,000 102,000Equity 69,000 176,000 Total liab. & equity 176,000 Line item Value Sales Depreciation EBIT Interest Taxable income Taxes Net income 780,000 Operating expenses 639,600 25,000 115,400 8,000 107,400 35,442 71,958 The company has 30,000 shares outstanding, each currently trading at $22.3. a. What are earnings per share? b. What is the price-earnings ratio? c. What is the book value per share? d·What is the market/book ratio?

Explanation / Answer

a. Calculation of Earnings Per Share

EPS or Earnings Per Share can be calculated by the following formula:

Profit After Taxes/ Outstanding shares

ie. $71,958 / 30,000 ie. $2.398/ share

b. Calculation of Price-Earnings per Share

Price-Earnings Per share can be as following:

Stock Price/EPS ie. $22.3 /$2.398 ie. 9.30 times

c. Calculation of Book value per share

Book value can be calculated by :

Shareholder's Equity / Oustanding shares ie. $69,000 / 30,000 ie. $2.30/share

d. Calculation of Market/Book Ratio

Divide the market price by the book value of the share like this:

$22.30 / $2.30 = 9.70 times

Related Questions

Navigate

• Browse (All)
• Browse N
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.