SMOLIRA GOLF CORP. 2014 and 2015 Balance Sheets Smolira Golf Corp. has 40,000 sh

Question

SMOLIRA GOLF CORP.
2014 and 2015 Balance Sheets

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 $42.

  

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 10 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 $ 23,066 $ 25,300       Accounts payable $ 24,384 $ 28,300       Accounts receivable 13,648 16,400       Notes payable 14,000 12,000       Inventory 27,152 28,300       Other 12,771 19,700         Total $ 63,866 $ 70,000         Total $ 51,155 $ 60,000   Long-term debt $ 81,000 $ 90,000   Owners’ equity       Common stock and paid-in surplus $ 55,000 $ 55,000       Accumulated retained earnings 213,406 229,000   Fixed assets   Net plant and equipment $ 336,695 $ 364,000   Total $ 268,406 $ 284,000   Total assets $ 400,561 $ 434,000   Total liabilities and owners’ equity $ 400,561 $ 434,000 SMOLIRA GOLF CORP.
2015 Income Statement   Sales $ 333,706   Cost of goods sold 215,200   Depreciation 49,300   Earnings before interest and taxes $ 69,206   Interest paid 15,500   Taxable income $ 53,706   Taxes (30%) 16,112   Net income $ 37,594       Dividends $ 22,000       Retained earnings 15,594

Explanation / Answer

a) Calculation of price-earnings ratio?

Earnings per Share = Net income available to equity shareholders / Shares outstanding

= 37594/40000

= .93985

PE Ratio = Market Value per Share / Earnings per Share

= 42/.93985

= 44.69

b) Calculation of Dividend per share

Dividend per share = Total Dividend / Shares outstanding

= 22000/40000

= 0.55

c) Calculation of market-to-book ratio

Book value per share = Shareholders' equity / Average number of common shares

= (55000+229000)/40000

= 284,000/40,000

= 7.10

Market-to-book ratio = Market price per share / Book value per share

= 42/7.10

= 5.92

d) Calculation of PEG ratio

PEG ratio = PE ratio / earnings growth rate

= 44.69/10

= 4.47

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

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