1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
shtirl [24]
3 years ago
6

ABC Company had addition to retained earnings for the current fiscal year just ended of $395,000. The firm paid out $195,000 in

cash dividend, and it has ending total equity of $5.3 million. The company currently has 170,000 shares of common stock outstanding. Please answer the following questions:
1. What are earnings per share (E/PS)?
2. Dividends per share?
3. Book value of share?
4. If the stock currently sells for $64 per share, what is the market-to-book ratio?
5. The price to earnings ratio (P/E)?
6. The company had sales of $5.15 million, what is the price to sales ratio (P/S)?
7. Finally, explain the implication of P/E ratio for different types of investors.
Business
1 answer:
Evgesh-ka [11]3 years ago
5 0

Answer:

ABC Company

1. E/PS = $3.47

2. Dividends per share = $1.15

3. Book value of share = $31.18

4. Market-to-book ratio = 2.05 : 1

5. Price to earnings ratio (P/E) = 18.44 times

6. Price to Sales ratio (P/S) = 2.11 times or 2.11 : 1

7. A high P/E ratio shows that a company's share is overvalued and vice versa.  This knowledge will equip the investor to take position.  Some investors are interested in the long-term growth of their investments.  Others are interested in the short-term.  With P/E ratio, an investor who is interested in the long-term growth can determine the market value and the future earnings growth.  For those interested in short-term, they can know when the price is rising to sell off their investment and maximize profit.

Explanation:

Addition to retained earnings = $395,000

Dividend paid out $195,000

Net income $590,000

Ending Equity = $5.3 million

Beginning Equity = $4,905,000 ($5,300,000 - 395,000)

Outstanding common stock shares = 170,000

2) Earnings per share (E/PS) = Earnings or Net Income/ No. of outstanding shares = $590,000/170,000 = $3.47

3) Dividends per share = Dividends paid/ No. of outstanding shares = $195,000/170,000 = $1.15

4) Book value of share = Ending Equity/No. of outstanding shares = $5,300,000/170,000 = $31.18

5) Market-to-book ratio = Market price/book value = $64/$31.18 = 2.05 : 1

6. Price to earnings ratio (P/E) = Market price/EPS = $64: $3.47 = 18.44 times

7. Price to Sales ratio (P/S) = Market Capitalization/Sales Revenue = ($64 x 170,000)/$5,150,000 = 2.11 : 1

8. Market capitalization = Market price of shares multiplied by number of outstanding shares.

You might be interested in
WILL MARK BRAINLIST... I'm trying to think of an acronym for BOSS. I've already come up with one. The acronyms have to be extrem
azamat

Answer:

Base Operating Supply System

Explanation:

lol

5 0
3 years ago
2. The European Union and the United States are trading partners. (a) If the current account balance is zero, will an increase i
nalin [4]

Answer: Deficit

Explanation:

The current account shows the difference between imports and exports as well as net income from outside.

If this balance is zero, it means that imports are equal to exports and income sent abroad equals income recovered from abroad.

If real income in the US was to increase, people would demand more goods and services including more imports. This will shift the current account to a deficit as the imports will surpass the exports.

3 0
3 years ago
A budget represents the plans that a company has in place to achieve its goals.
goldfiish [28.3K]
I believe the answer is A. True
5 0
3 years ago
Read 2 more answers
Use the following scenario to answer the next ten questions: Natasha can produce either 5,000 pounds of cheese or 20 houses per
andrew11 [14]

Answer:

Jameson’s opportunity cost of producing one pound of cheese is 0,002 house(s).

Explanation:

Opportunity costs represent the benefits an individual, investor or business misses out on when choosing one alternative over another. Resources are limited, therefore the decision to make a quantity of product A limits the amount of producing product B.

In this exercise, Jameson has the resources to produce 5000 pounds of cheese or 10 houses per year or a combination of both.

To calculate the opportunity cost you need to determine how much of a house is 1 pound of cheese.

Opportunity cost= 10house/5000pounds= 0,002

<u>So to produce 1 pound of cheese you need 0,002 of a house.</u>

4 0
3 years ago
Read 2 more answers
An investment banker has recommended aâ $100,000 portfolio containing assetsâ B, D, and F.â $20,000 will be invested in assetâ B
soldier1979 [14.2K]

Answer:

β = 1.45

Explanation:

The beta of the portfolio is defined as an average of the betas (β) of each asset within the portfolio weighted by their respective invested amounts (A):

A_{P}* \beta_{P} =A_{B}* \beta_{B} +A_{D}* \beta_{D} +A_{F}* \beta_{F} \\\beta_{P} =\frac{20,000 * 1.5 + 50,000*2.0 +30,000*0.5}{100,000}\\\beta_{P} = 1.45

The beta of the portfolio is 1.45

8 0
3 years ago
Other questions:
  • As noted in this case, email messages generally have a "low expectation of privacy." What does that phrase mean and what implica
    14·1 answer
  • he initials GAAP stand for a. Generally Accepted Accounting Principles b. Generally Accepted Accounting Practices c. General Acc
    7·1 answer
  • tAn employee has a claim on the cash flows of Martin’s Machines. This claim is defined as a claim by one of the firm's:
    12·1 answer
  • The Coffee Cup Company had a credit balance of $500 in interest payable at the beginning of the period, and a credit balance of
    13·1 answer
  • Santoyo Corporation keeps careful track of the time required to fill orders. Data concerning a particular order appear below:Hou
    12·1 answer
  • What is the benefit of purchasing a generalized insurance policy?
    8·2 answers
  • Which of the following was not a priority of Soviet planners?
    12·1 answer
  • True or False. For consumers, a credit card offers convenience.
    8·1 answer
  • A wholesale distributor of cleaning products is thinking about buying 200 more cases of a floor cleaning compound than she norma
    12·1 answer
  • Often Running is a retail store that caters to individuals who enjoy running and walking. However, the store understands that no
    9·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!