Question

In: Finance

Please do it by type not pics. 1.You are considering an investment in Roxie's Bed &...

Please do it by type not pics.

1.You are considering an investment in Roxie's Bed & Breakfast Corp. During the last year, the firm's income statement listed an addition to retained earnings of $10.20 million and common stock dividends of $3.10 million. Roxie's year-end balance sheet shows common stockholders' equity of $44.9 million with 19 million shares of common stock outstanding. The common stock's market price per share was $9.30.

What is Roxie's Bed & Breakfast's book value per share?

What is Roxie's Bed & Breakfast's earnings per share?

Calculate the market-to-book ratio.

Solutions

Expert Solution

Answr = 1)
Book Value per shares = Stockhoder's Equity balance / No. of outstanding shares
Book Value per shares = $ 44.90 Million / $ 19 Million of Shares = $                                  2.36
Answer = 2)
` CALCULATION OF EARNING PER SHARES
Earning per shares = Net Income / total Shares outstanding
STEP 2: CALCULATION OF THE RATIO
Earning Per shares =
Net Income available for shareholder= $                       10.20 Million
Divide By "/" By
Number of Shares Outstanding                                 19 Million
Earning Per shares = $                         0.54
Earning Per Shares = $                         0.54
Answer = 3)
Market to Book Ratio = Market price Per shares / Book Value per shares
Market to Book Ratio = $ 9.30 / $ 2.36 =                              3.94
Answer = 3.94

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