To calculate: P/E ratio for Vriend Software Inc.
Introduction:
Book value per share:
It is a metric used by investors to know whether the price of a share is undervalued or overvalued by comparing it to the market value per share. If a company’s book value per share is lower than the market value per share, its stock is overvalued and, if the book value per share is higher than the market value per share, the stock is undervalued.
Earnings per share:
EPS is the profit earned by shareholders on each share owned by them. A higher EPS indicates a higher value of the company because investors are ready to pay a higher price for one share of the company.
P/E ratio:
Price earnings ratio is calculated by dividing a company’s current share price by its EPS. It helps in valuing the present as well as future profitability of a company.
Want to see the full answer?
Check out a sample textbook solutionChapter 2 Solutions
Loose Leaf for Foundations of Financial Management Format: Loose-leaf
- A company has earnings of $3.18 per share. The benchmark PE for the company is 18. What stock price would you consider appropriate? Please use a HP 10bii+ Financial Calculatorarrow_forwardA company has an EPS of $2.85, a book value per share of $27.93, and a market/book ratio of 2.8x. What is its P/E ratio? The stock price should be rounded to the nearest cent. Do not round intermediate calculations. Round your answers to two decimal places.arrow_forwardUltra Petroleum (UPL) has earnings per share of $1.67 and a P/E ratio of 33.16. What’s the stock price? (Round your answer to 2 decimal places.)arrow_forward
- Ultra Petroleum (UPL) has earnings per share of $1.65 and a P/E ratio of 33.12.What’s the stock price? (Round your answer to 2 decimal places.)arrow_forwardThe following information was available for the year ended December 31, 2022: Dividends per share Earnings per share 1.35 3.00 28.20 Market price per share at year-end Required: a. Calculate the price/earnings ratio for 2022. Note: Round your answer to 2 decimal places. b. Calculate the dividend payout ratio for 2022. Note: Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34). c. Calculate the dividend yield for 2022. Note: Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34). a. Price/Earning ratio b. Dividend payout ratio c. Dividend yield % Ji di %arrow_forwardEstimate its cost of common equity, Maxell and Associcates recently hired you. Obtain the following data, D0=$0.90, P0= $27.50, gl=7% constant. Based on the dividend grwoth model, What is the cost of common for reinvested earnings? (10.50%,9.29%,10.08%,9.68%,10.92%)arrow_forward
- International Business Machines (IBM) has earnings per share of $6.85 and a P/E ratio of l15.19. What is the stock price?arrow_forwardAre bio technology company stock is currently selling for $48.35 per share. The earnings per share are $4.14 and the dividend is $1.80. A-what is the current yield of stock as a percent round your answer to the nearest 10th of a percent?  B-what is the price earnings ratio round your answer to the nearest whole number?arrow_forwardPfizer, Inc. (PFE) has earnings per share of $2.09 and a P/E ratio of 11.02. What is the stock price?arrow_forward
- A firm has common stock with D1 = $3.00; P0 = $30; g = 5%; andF = 4%. If the firm must issue new stock, what is its cost of externalequity, re? (15.42%)arrow_forwardRatio Analysis MJO Inc. has the following stockholders equity section of the balance sheet: On the balance sheet date, MJOs stock was selling for S25 per share. Required: Assuming MJOs dividend yield is 1%, what are the dividends per common share? Assuming MJOs dividend yield is 1% and its dividend payout is 20%, what is MJOs net income?arrow_forwardReno Revolvere has an EPS of $1.50, a cash flow per share of $3.00, and a price/cash flow ratio of 8.0. What is its P/E ratio?arrow_forward
- Intermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage LearningCornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage LearningManagerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub