Amounts are in thousands of dollars (except number of shares and price per share): Kiwi Fruit...

Amounts are in thousands of dollars (except number of shares and price per share):

Kiwi Fruit Company Balance Sheet
Cash and equivalents	$	580
Operating assets		680
Property, plant, and equipment		2,700
Other assets		125
Total assets	$	4,085

Current liabilities	$	920
Long-term debt		1,275
Other liabilities		135
Total liabilities	$	2,330
Paid in capital	$	355
Retained earnings		1,400
Total equity	$	1,755
Total liabilities and equity	$	4,085

Kiwi Fruit Company Income Statement
Net sales	$	9,500
Cost of goods sold		(7,500	)
Gross profit	$	2,000
Operating expense		(800	)
Operating income	$	1,200
Other income		120
Net interest expense		(200	)
Pretax income	$	1,120
Income tax		(210	)
Net income	$	910

Earnings per share	$	2.00
Shares outstanding		455,000
Recent price	$	27.00

Kiwi Fruit Company Cash Flow Statement
Net income	$	910
Depreciation and amortization		225
Increase in operating assets		(100	)
Decrease in current liabilities		(126	)
Operating cash flow	$	909

Net (purchase) sale of property	$	160
Increase in other assets		(83	)
Investing cash flow	$	77

Net (redemption) issuance of LTD	$	(184	)
Dividends paid		(164	)
Financing cash flow	$	(348	)
Net cash increase	$	638

Calculate the price-book, price-earnings, and price-cash flow ratios for Kiwi Fruit

Solutions

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Answer:

Answer a.

Book Value per share = Total Equity / Number of shares outstanding
Book Value per share = $1,755,000 / 455,000
Book Value per share = $3.86

Price-book Ratio = Recent Price / Book Value per share
Price-book Ratio = $27.00 / $3.86
Price-book Ratio = 7.00

Answer b.

Earnings per share = Net Income / Number of shares outstanding
Earnings per share = $910,000 / 455,000
Earnings per share = $2.00

Price-earnings Ratio = Recent Price / EPS
Price-earnings Ratio = $27.00 / $2.00
Price-earnings Ratio = 13.50

Answer c.

Cash flow per share = (Net Income + Depreciation and Amortization) / Number of shares outstanding
Cash flow per share = ($910,000 + $225,000) / 455,000
Cash flow per share = $2.4945

Price-cash flow Ratio = Recent Price / Cash flow per share
Price-cash flow Ratio = $27.00 / $2.4945
Price-cash flow Ratio = 10.82

jeff jeffy answered 1 year ago

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