In: Accounting
You are given the following information for Smashville, Inc.
Cost of goods sold: |
$ |
259,000 |
|
Investment income: |
$ |
3,100 |
|
Net sales: |
$ |
402,000 |
|
Operating expense: |
$ |
94,000 |
|
Interest expense: |
$ |
7,400 |
|
Dividends: |
$ |
11,000 |
|
Tax rate: |
30 |
% |
|
Current liabilities: |
$ |
20,000 |
Cash: |
$ |
21,000 |
Long-term debt: |
$ |
7,000 |
Other assets: |
$ |
39,000 |
Fixed assets: |
$ |
134,000 |
Other liabilities: |
$ |
5,000 |
Investments: |
$ |
15,000 |
Operating assets: |
$ |
26,000 |
During the year, Smashville, Inc., had 17,000 shares of stock outstanding and depreciation expense of $17,000. At the end of the year, Smashville stock sold for $65 per share. Calculate the price-book ratio, price-earnings ratio, and the price-cash flow ratio.
Price-book ratio = Market Price per share / Book value per share = $65 / $11.94 = 5.44
Market price per share = $ 65 (Given in question)
Book value per share = (Total assets - Total liabilities) / No. of shares outstanding = $203,000 / 17,000 = $11.94
Price-earning ratio = Market Price per share / Earnings per share = $65 / $1.84 = 35.33
Market price per share = $ 65 (Given in question)
Earnings per share = Profit available to common share holders / No. of shares outstanding = $31,290 / 17,000 = $1.84
Price-cash flow ratio = Market Price per share / Operating cashflow per share = $65 / $3.09 = 21.04
Market price per share = $ 65 (Given in question)
Operating cash flow per share = Operating cash flow per share holders / No. of shares outstanding = $52,590 / 17,000 = $3.09