Question

Some recent financial statements for Smolira Golf, Inc., follow.

SMOLIRA GOLF, INC. Balance Sheets as of December 31, 2018 and 2019
	2018		2019				2018		2019
Assets						Liabilities and Owners’ Equity
Current assets						Current liabilities
Cash	$	3,231	$	3,357		Accounts payable	$	2,148	$	2,590
Accounts receivable		4,772		5,791		Notes payable		1,745		2,106
Inventory		12,458		13,792		Other		89		106
Total	$	20,461	$	22,940		Total	$	3,982	$	4,802
						Long-term debt	$	13,500	$	16,260
						Owners’ equity
						Common stock
						and paid-in surplus	$	37,500	$	37,500
Fixed assets						Accumulated retained earnings		15,649		39,039
Net plant and equipment	$	50,170	$	74,661		Total	$	53,149	$	76,539
Total assets	$	70,631	$	97,601		Total liabilities and owners’ equity	$	70,631	$	97,601

SMOLIRA GOLF, INC. 2019 Income Statement
Sales			$	187,170
Cost of goods sold				126,103
Depreciation				5,343
EBIT			$	55,724
Interest paid				1,440
Taxable income			$	54,284
Taxes				18,999
Net income			$	35,285
Dividends	$	11,895
Retained earnings		23,390

Smolira Golf has 13,000 shares of common stock outstanding, and the market price for a share of stock at the end of 2019 was $76.
a.	What is the price-earnings ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
b.	What is the price-sales ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
c.	What are the dividends per share? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
d.	What is the market-to-book ratio at the end of 2019?(Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Answer 1

a. price-earnings ratio is computed as follows:

= Market price per share / Earnings per share

Earnings per share is computed as follows:

= Net Income / Number of shares outstanding

= $ 35,285 / 13,000

= $ 2.714230769

So, the ratio will be as follows:

= $ 76 / $ 2.714230769

= 28 times Approximately

b. Price-sales ratio is computed as follows:

= Market price per share / Sales per share

Sales per share is computed as follows:

= Sales / Number of shares outstanding

= $ 187,170 / 13,000

= $ 14.39769231

So, the ratio will be as follows:

= $ 76 / $ 14.39769231

= 5.28 times Approximately

c. Dividend per share is computed as follows:

= Amount of dividend / Number of shares outstanding

= $ 11,895 / 13,000

= $ 0.92 Approximately

d. Market to book ratio is computed as follows:

= Market price per share / Book value per share

Book value per share is computed as follows:

= Owners equity / Number of shares outstanding

= $ 76,539 / 13,000

= $ 5.887615385

So, the ratio will be as follows:

= $ 76 / $ 5.887615385

= 12.91 times Approximately