Question

Wilson, Inc., has a current stock price of $43.00. For the past year, the company had net income of $7,100,000, total equity of $21,750,000, sales of $40,700,000, and 5.8 million shares of stock outstanding. a. What are earnings per share (EPS)? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the price-earnings ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What is the price-sales ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) d. What is the book value per share? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) e. What is the market-to-book ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Answer 1

Answer:

a. What are earnings per share (EPS)?

earnings per share = (net income - preferred dividends) / average outstanding common stocks = $7,100,000 / 5,800,000 = $1.22

b. What is the price-earnings ratio?

price earnings ratio = stock price / EPS = $43 / $1.224138 = 35.13

c. What is the price-sales ratio?

price sales ratio = market capitalization / total revenue = ($43 x 5,800,000) / $40,700,000 = $249,400,000 / $40,700,000 = 6.13

d. What is the book value per share?

book value per share = total equity / outstanding shares = $21,750,000 / 5,800,000 = $3.75

e. What is the market-to-book ratio?

market to book ratio = market value per stock / book value per stock = $43 / $3.75 = 11.47