Question

Dove, Inc., had additions to retained earnings for the year just ended of $643,000. The firm paid out $40,000 in cash dividends, and it has ending total equity of $7.38 million. a. If the company currently has 750,000 shares of common stock outstanding, what are earnings per share? Dividends per share? What is book value per share? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. If the stock currently sells for $30.80 per share, what is the market-to-book ratio? The price-earnings ratio? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) c. If total sales were $10.68 million, what is the price-sales ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Answer 1

Answer:

Earnings for the year = Addition to retained earnings + Dividend paid = $643,000 + $40,000 = $683,000

a. Earnings per share = Earnings / No of shares = $683,000 / 750,000 = 0.91

Dividend per share = Dividend / No of shares = $40,000 / 750,000 = 0.05

Book value per share = Ending equity / No of shares = $7,380,000 / 750,000 = $9.84

b. Market price per share is 30.8. Market to book ratio = $30.80 / $9,84 = $3.13

c. Price earning ratio = $30.80/$0.91 = $33.82

Total sales = $10,680,000, Sales per share = 14.24

Price sales ratio = Market price / Sales = $30.80 / $14.24 = $2.16