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Setler [38]
3 years ago
12

At year​ end, Economy Automotive​ Company's balance sheet showed total assets of​ $60 million, total liabilities​ (including pre

ferred​ stock) of​ $45 million, and​ 1,000,000 shares of common stock outstanding. Next​ year, Economy Automotive is projecting that it will have net income of​ $1.5 million. If the average​ P/E multiple in the industry is​ 17, what should be the price of Economy​ Automotive's stock?(A) $15.00 (B) $7.50 (C) $52.50 (D) $75.00
Business
1 answer:
atroni [7]3 years ago
8 0

Answer:

$25.50

Explanation:

Price to earning ratio is calculated by dividing market price per share with the earnings per share. This is investor ratio which determines how much an investor is willing to pay per dollar. This ratio is used by investors to identify whether the company is undervalued or overvalued.

To calculate stock price of Economy Automotive is calculated by multiplying net income with the P/E ratio.

Stock price = $1.5 million * 17 = $25.50

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faust18 [17]

Shareholders' equity is equal to net fixed assets minus long-term debt plus net working capital.

Shareholders' equity refers to the amount owners of a company have invested in the said company:

  • Shareholders' equity includes the money they've directly invested and the accumulation of income that has been accrued in the name of the company as earned since the start of the investment and reinvestment.
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  • Another way to ascertain shareholders' equity is by subtracting total assets from total liabilities.

Therefore, shareholders' equity is equal to net fixed assets minus long-term debt plus net working capital.

Learn more about shareholders' equity here: brainly.com/question/14032844

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2 years ago
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Answer:

Tbh if I could stop the time

I would do anything to get the time back to normal since it will probably  be boring doing it yourself with no help if you know what I mean :)

Explanation:

Hoped this helped :)

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Generating ideas by comparing specific project practices or product characteristics to those of other projects or products insid
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Answer:

This process is known as Benchmarking

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