I'll try my best.
Given:
<span>market-to-book ratio of 3.3,
net income of $87,100,
a book value per share of $18.50,
7,500 shares of stock outstanding
market to book ratio = Market Value </span>÷ Book Value
Book Value per share = Total Common S.H.E ÷ Number of Common Shares
Price-earnings ratio = Market Value per share ÷ Earnings per share
Earnings per share = (Net Income - Dividends on Preferred Stocks) ÷ Ave. Outstanding shares
Book value
per share = total common s.h.e / number of common shares
18.50 =
total common s.h.e / 7,500
Total common
s.h.e = 18.50 * 7,500
Total common
S.h.e = 138,750
Market-to-book
value = market value / book value
3.3 = market
value / 138,750
Market value
= 3.3 * 138,750
Market value
= 457,875
Earnings per
share = (Net Income – Dividends on Preferred Stocks) / ave. outstanding shares
EPS = 87,100
/ 7,500
EPS = 11.61
Market value
per share = 457,875 / 7,500
MVPS = 61.05
Price –
Earnings Ratio = Market Value per share / Earnings per share
P/E ratio =
61.05 / 11.61
<span>P/E ratio =
5.26</span>
