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TiliK225 [7]
4 years ago
11

A firm has​ 50,000,000 shares outstanding with a current market PPS of​ $25.57. If the firm has total assets of​ $600M, total li

abilities of​ $175M and net income of​ $500M, it would have a​ P/E of​ _____ and a​ Market-Book ratio of​ _______. A. ​2.56; 3.01 B. ​3.01; 2.56 C. ​8.25; 5.32 D. ​5.32; 8.25
Business
1 answer:
Thepotemich [5.8K]4 years ago
7 0

Answer: Option A

Explanation: P/E ratio can be calculated using following formula :-

P/E\:ratio=\frac{Market\:price}{earning\:per\:share}

where,

earning\:per\:share=\frac{net\:income}{no.\:of\:shares}

earning\:per\:share=\frac{500m}{50m}

                                      = $10

putting the values into equation we get :-

P/E\:ratio=\frac{25.57}{10}

                       = 2.57

similarly, market-book ratio can be calculated as follows :-

\frac{market\:value\:of\:share}{book\:value\:of\:share}

where,

book\:value=\frac{425m}{50m}

                          = 8.5

now putting the values into equation, we get :-

\frac{25.57}{8.5}

= 3.01

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Phillip​ Witt, president of Witt Input​ Devices, wishes to create a portfolio of local suppliers for his new line of keyboards.
kirill115 [55]

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