Question

Makers Corp. had additions to retained earnings for the year just ended of $248,000. The firm paid out $187,000 in cash dividends, and it has ending total equity of $4.92 million. The company currently has 150,000 shares of common stock outstanding. a. What are earnings per share? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What are dividends per share? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the book value per share? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) d. If the stock currently sells for $80 per share, what is the market-to-book ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) e. What is the price-earnings ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) f. If the company had sales of $4.74 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:  

(a.) Earning per share = $\frac{Retained earning + dividend paid out }{common stock}$

Earning per share = $\frac{248000 + 187000 }{150000}$

Earning per share = $2.90 per share

(b.) Dividend per share = $\frac{Dividend paid out }{common stock}$

Dividend per share =  $\frac{187000}{150000}$

Dividend per share = $ 1.25 per share

(c.) Book value per share =  $\frac{Book value of equity }{common stock}$

Book value per share =  $\frac{4920000 }{150000}$

Book value per share = $32.80 per share

(d.) Market to book ratio = $\frac{Market price per share }{Book value per share}$

Market to book ratio = $\frac{80}{32.80}$

Market to book ratio = $2.44 per share

(e.) Price - earning ratio = $\frac{Market price per share }{Earning per share}$

Price - earning ratio =  $\frac{80}{2.90}$ = 27.59 times

(f.) Price sales ratio = $\frac{Market price per share }{sales per share}$

Price sales ratio = $\frac{80}{\frac{4740000}{150000} }$ = $\frac{80}{31.60}$ = 2.53 times