Calculation of P/E ratio and M/B ratio. IIS has $35 million of common equity, $14 million of net income, and 7 million shares of common shares outstanding. The market price of the common stock is $8 per share.
The price to earnings ratio (P/E ratio) is the ratio of firm's current market price and earnings per share. It gives an idea about the dollar amount an investor can invest in the firm in order to earn one dollar of that firm's earnings.
Earnings per share (EPS) is the firm's profit earned for each share. It is calculated by dividing the firm's total profit with total number of outstanding shares.
Market to book ratio (M/B ratio) is the ratio which shows the relationship between the book value of the stock in the balance sheet and an actual market price of the stock. It helps to measure how much investors are paying against each dollar of book value of the stock in the balance sheet.
Book value per share is the value which measures the firm's net asset value on a per share basis.
Trending nowThis is a popular solution!
- Rebert Inc. showed the following balances for last year: Reberts net income for last year was 3,182,000. Refer to the information for Rebert Inc. above. Also, assume that the market price per share for Rebert is 51.50. Required: 1. Compute the dollar amount of preferred dividends. 2. Compute the number of common shares. 3. Compute earnings per share. (Note: Round to two decimals.) 4. Compute the price-earnings ratio. (Note: Round to the nearest whole number.)arrow_forwardRebert Inc. showed the following balances for last year: Reberts net income for last year was 3,182,000. Refer to the information for Rebert Inc. above. Also, assume that the dividends paid to common stockholders for last year were 2,600,000 and that the market price per share of common stock is 51.50. Required: 1. Compute the dividends per share. 2. Compute the dividend yield. (Note: Round to two decimal places.) 3. Compute the dividend payout ratio. (Note: Round to two decimal places.)arrow_forwardThe Kretovich Company had a quick ratio of 1.4, a current ratio of 3.0, a days’ sales outstanding of 36.5 days (based on a 365-day year), total current assets of $810,000, and cash and marketable securities of $120,000. What were Kretovich’s annual sales?arrow_forward
- Reagan Corp has net income of $843,800 for the year. Their share price is $13.54 and they have 311,890 outstanding. What is the firm's price-earnings ratio?arrow_forwardViewPoints Security's financial statements, which were constructed a few days ago, report the companys has $1 million of common equity with 500,000 shares of common stock outstanding and its net income was $2.1 million. If ViewPoint's common stock currently sells for $33.60 per sahre, what are (a) P/E ratio and (b) M/B ratio?arrow_forward(DuPont analysis) Dearborn Supplies has total sales of $197 million, assets of $109 million, a return on equity of 34 percent, and a net profit margin of 7.2 percent. What is the firm's debt ratio? The company's debt ratio is %. (Round to one decimal place.)arrow_forward
- On the balance sheet of Bearcat Inc., you notice "Common Stock ($0.10 par)" of $248,655, "Capital Surplus" of $282,621, and "Retained Earnings" of $210,534. If Bearcat Inc. has Sales of $292,6836 and a profit margin of 30.52%, what is the price/earnings (P/E) ratio of the firm if their stock is currently selling for $21.94 per share? O None of these options are correct 67.18 54.97 240.97 61.07 DISCLarrow_forwardSmith Inc. has announced net earnings of $877,500 for this year. The company has 325,660 shares outstanding, and the year-end stock price is $50.48. What are the company’s earnings per share and P/E ratio? a. EPS: $2.69; P/E: 18.77 times b. EPS: $0.37; P/E: 18.77 times c. EPS: $0.37; P/E: 10.55 times d. EPS: $2.69; P/E: 10.55 timesarrow_forwardWhite Lily Company has prior year total assets of $7,111,885, current year total assets of $7,917,054, prior year shareholder equity $1,925,728, and current year shareholder equity of 2,717,735. What is its equity multiplier? Round the answer to two decimals.arrow_forward
- North/South Airlines generated the following information from its financial statements: (1) P/E ratio equals 14.0, (2) common stock market price per share is $56, (3) fixed assets turnover equals 5.0, (4) current ratio equals 5.0, (5) current liabilities equal $550,000, (6) net profit margin equals 5 percent, and (7) 60,000 shares of common stock are outstanding. A: What is North/South's return on assets (ROA)? Round your answer to two decimal places.B:What is North/South's total assets turnover? Round your answer to two decimal places.arrow_forwardFFDP Corporation has yearly sales of $29.9 million and costs of $15.7 million. The company’s balance sheet shows debt of $55.9 million and cash of $39.9 million. There are 1,960,000 shares outstanding and the industry EV/EBITDA multiple is 9.4. a. What is the company’s enterprise value? b. What is the stock price per share?arrow_forwardLast Year, a corporation had a book value of equity of $363.39 million of USDs, 11.32 million shares outstanding,and a market price of $44.36 per share. The corporation also had cash of $4.28 million of USDs, and total debt of$390.16 million USDs. What was the corporation's market - to - book ratio?arrow_forward
- EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENTManagerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage LearningIntermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage Learning