Question

The Anderson Company has a net profits of

​$19

​million, sales of

​$226

​million, and

3.6

million shares of common stock outstanding. The company has total assets of

​$142

million and total​ stockholders' equity of

​$68

million. It pays

​$2.14

per share in common​ dividends, and the stock trades at

​$39

per share. Given this​ information, determine the​ following:

a. ​Anderson's EPS.

b. ​Anderson's book value per share and​ price-to-book-value ratio.

c. The​ firm's P/E ratio.

d. The​ company's net profit margin.

e. The​ stock's dividend payout ratio and its dividend yield.

f. The​ stock's PEG​ ratio, given that the​ company's earnings have been growing at an average annual rate of

6.7​%.

Answer 1

Sales	$226,000,000
Net Profit	$19,000,000
a) Anderson's EPS =	Net Profit
	Number of Shares
=	19,000,000
	3,600,000
=	$5.28
b) Anderson's Book Value per Share =	Book Value
		Number of Shares
Book Value = Total Assets - Liability = Shareholder's Equity = $68,000,000
Anderson's Book Value per Share =	68,000,000
		3,600,000
Anderson's Book Value per Share =	$18.89
Price to Book Value Ratio = Share Price / Book value per share = 39/18.89
Price to Book Value Ratio = 2.06
C) PE(Price to Earning) Ratio = Share Price / EPS(Earning per share) = 39/5.28
Price to Earning Ratio = 7.39
D) Net Profit Margin = (Net Profit / Sales)*100 = (19million / 226 million)*100
Net Profit Margin = 8.41%
E) Dividend Payout Ratio = Dividend per share / Earning per share= 2.14/5.28
Dividend Payout Ratio = 40.54%
Dividend Yield = Dividend per share / Market price per share = 2.14/39
Dividend Yield = 4.49%
F) Stock's PEG Ratio = PE Ratio / Earning Growth = 7.39/6.7
Stock's PEG Ratio = 1.10