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Allison & Co. and Bee, Inc. reported the following numbers (in millions) for fiscal year 2014. ...

Allison & Co. and Bee, Inc. reported the following numbers (in millions) for fiscal year 2014.

	Allison & Co.		Bee, Inc.
Net income	$	595.70	$	217.24
Shares outstanding		87.17		57.22
Stock price	$	92.59	$	37.26
Total equity	$	1,738.30	$	959.48

Calculate the earnings per share, market-to-book ratio, and price–earnings ratio for each company. (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

	Allison & Co.		Bee, Inc.
Earnings per share	$	times	$	times
Market-to-book ratio		times		times
Price–earnings ratio		times

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Expert Solution

	Allison & Co.		Bee, Inc.
Earnings per share	$6.83	Times	$3.80	Times
Market-to-book ratio	4.64	Times	2.22	Times
Price–earnings ratio	13.56	Times	9.80	Times

Explanation;

Earnings per share for Allison & Co.;

Earnings per share = Net income / shares outstanding

Earnings per share = $595.70 / 87.17

Earnings per share = $6.83

Earnings per share for Bee Inc.;

Earnings per share = Net income / shares outstanding

Earnings per share = $217.24 / 57.22

Earnings per share = $3.80

Market-to-book ratio for Allison & Co.;

Market-to-book ratio = Market price per share / Book value per share

Market price per share = $92.59

Book value per share = $1738.30 / 87.17 = $19.94

Market-to-book ratio ($92.59 / $19.94) = 4.64 times

Market-to-book ratio for Bee Inc.;

Market-to-book ratio = Market price per share / Book value per share

Market price per share = $37.26

Book value per share = $959.48 / 57.22 = $16.77

Market-to-book ratio ($37.26 / $16.77) = 2.22 times

Price-earnings ratio for Allison & Co.;

Price-earnings ratio = Market value per share / EPS

Earnings per share = $92.59 / $6.83

Earnings per share = 13.556 or 13.56 times (Approx.)

Price-earnings ratio for Bee Inc.;

Price-earnings ratio = Market value per share / EPS

Earnings per share = $37.26 / $3.80

Earnings per share = 9.805 or 9.80 times (Approx.)

jeff jeffy answered 1 year ago

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