Question

Rossdale, Inc., had additions to retained earnings for the year just ended of $633,000. The firm paid out $90,000 in cash dividends, and it has ending total equity of $7.28 million.

If the company currently has 650,000 shares of common stock outstanding, what are earnings per share? Dividends per share? What is book value per share? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

Earnings per share	$
Dividends per share	$
Book value per share	$

If the stock currently sells for $29.80 per share, what is the market-to-book ratio? The price−earnings ratio? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

Market-to-book ratio		times
Price−earnings ratio		times

If total sales were $10.58 million, what is the price−sales ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Price−sales ratio             times

Answer 1

Answer a.

Additions to Retained Earnings = Net Income - Cash Dividends
$633,000 = Net Income - $90,000
Net Income = $723,000

Earnings per share = Net Income / Number of shares outstanding
Earnings per share = $723,000 / 650,000
Earnings per share = $1.11

Answer b.

Dividends per share = Cash Dividends / Number of shares outstanding
Dividends per share = $90,000 / 650,000
Dividends per share = $0.14

Answer c.

Book Value per share = Ending Total Equity / Number of shares outstanding
Book Value per share = $7,280,000 / 650,000
Book Value per share = $11.20

Answer d.

Market-to-book Ratio = Current Price per share / Book Value per share
Market-to-book Ratio = $29.80 / $11.20
Market-to-book Ratio = 2.66 times

Answer e.

Price-earnings Ratio = Current Price per share / Earnings per share
Price-earnings Ratio = $29.80 / $1.11
Price-earnings Ratio = 26.85 times

Answer f.

Sales per share = Total Sales / Number of shares outstanding
Sales per share = $10,580,000 / 650,000
Sales per share = $16.28

Price-sales Ratio = Current Price per share / Sales per share
Price-sales Ratio = $29.80 / $16.28
Price-sales Ratio = 1.83 times