Dove, Inc., had additions to retained earnings for the year just ended of $627,000. The firm...

Dove, Inc., had additions to retained earnings for the year just ended of $627,000. The firm paid out $120,000 in cash dividends, and it has ending total equity of $7.22 million.

a.	If the company currently has 590,000 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 $29.20 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 $10.52 million, what is the price-sales ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)


a.	Earnings per share
	Dividends per share	$0.20
	Book value per share	$12.23
b.	Market-to-book ratio	2.38
	Price-earnings ratio
c.	Price-sales ratio	1.63

Solutions

Expert Solution

Answer to Part a.

Net Income = Addition to Retained Earnings + Dividends
Net Income = $627,000 + $120,000
Net Income = $747,000

Earnings per Share = Net Income / Common Stock Outstanding
Earnings per Share = $747,000 / 590,000
Earnings per Share = $1.27

Dividend per Share = Dividend Paid / Common Stock Outstanding
Dividend per Share = $120,000 / 590,000
Dividend per Share = $0.20

Book Value per Share = Total Equity / Common Stock Outstanding
Book Value per Share = $7,220,000 / 590,000
Book Value per Share = $12.24

Answer to Part b.

Market to Book Ratio = Market Price per Share / Book Value per share
Market to Book Ratio = $29.20 / $12.24
Market to Book Ratio = 2.39

Price- Earnings per Share = Market price per Share / Earnings per Share
Price- Earnings per Share = $29.20 / $1.27
Price- Earnings per Share = 22.99 times

Answer to Part c.

Sales per Share = Total Sales / Common Stock Outstanding
Sales per Share = $10,520,000 / 590,000
Sales per Share = $17.83

Price – Sales Ratio = Market price per Share / Sales per Share
Price – Sales Ratio = $29.20 / $17.83
Price – Sales Ratio = 1.64

jeff jeffy answered 2 months ago

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