Question
In: Finance
You are given the following information for Smashville, Inc. Cost of goods sold: $ 119,000 Investment...
You are given the following information for Smashville, Inc.
| Cost of goods sold: | $ | 119,000 | |
| Investment income: | $ | 2,300 | |
| Net sales: | $ | 232,000 | |
| Operating expense: | $ | 40,000 | |
| Interest expense: | $ | 7,400 | |
| Dividends: | $ | 11,000 | |
| Tax rate: | 40 | % | |
| Current liabilities: | $ | 18,000 |
| Cash: | $ | 21,000 |
| Long-term debt: | $ | 25,000 |
| Other assets: | $ | 39,000 |
| Fixed assets: | $ | 126,000 |
| Other liabilities: | $ | 5,000 |
| Investments: | $ | 43,000 |
| Operating assets: | $ | 45,000 |
During the year, Smashville, Inc., had 17,000 shares of stock outstanding and depreciation expense of $15,000. At the end of the year, Smashville stock sold for $52 per share. Calculate the price-book ratio, price-earnings ratio, and the price-cash flow ratio.
Solutions
Expert Solution
Income Statement
| Sales | 232,000.00 | |
| Add: Investment cost | 2,300.00 | |
| Gross income | 234,300.00 | |
| Less: | Cost of goods sold | 119,000.00 |
| Less: | operating expenses | 40,000.00 |
| Depreciation | 15,000.00 | |
| EBIT | 60,300.00 | |
| Less: | Interest | 7,400.00 |
| Income Before Income Tax (EBT) | 52,900.00 | |
| Less: Income Tax@40% | 21,160.00 | |
| Net Profit After Tax | 31,740.00 | |
| Less: Dividend | 11,000.00 | |
| Added to retained earnings | 20,740.00 | |
Book Value per Share = (Total Assets – Total Liabilities) / Number of shares outstanding
= (21000+39000+126000+43000+45000-(18000+25000+5000))/17000
= (226000/17000
= 13.29
price-book (P/B) Ratio = market price per share / book value per share
= 52/13.29
= 3.91
Earnings per share (EPS) = Net profit after tax/Number of shares outstanding
= 31740/17000
= 1.87
price-earnings ratio = market price per share /EPS
= 52/1.87
= 27.81 (if you do not rounded off EPS, answer comes to 27.85)
OPerating cash flow = Net income+non cash expenses-increase in working capital-other income
= 31740-2300+1500
= 30940
OPerating cash flow per share = 30940/17000
= 1.82
price-cash flow ratio =market price per share /OPerating cash flow per share
= 52/1.82
= 28.57
jeff jeffy answered 1 year agoRelated Solutions
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You are given the
following information for Smashville, Inc.
Cost of goods
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214,000
Investment
income:
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Net sales:
$
328,000
Operating
expense:
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45,000
Interest
expense:
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Dividends:
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Tax rate:
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Current
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Cash:
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Long-term
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Other
assets:
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38,000
Fixed
assets:
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Other
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During the year,
Smashville, Inc., had 17,000 shares of stock outstanding...
You are given the following information for Smashville, Inc. Cost of goods sold: $ 229,000 Investment...
You are given the
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Investment
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Net sales:
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Operating
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Interest
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Dividends:
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Tax rate:
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Current
liabilities:
$
18,000
Cash:
$
21,000
Long-term
debt:
$
23,000
Other
assets:
$
41,000
Fixed
assets:
$
166,000
Other
liabilities:
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Investments:
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Operating
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During the year,
Smashville, Inc., had 17,000 shares of stock outstanding and...
You are given the following information for Smashville, Inc. Cost of goods sold: $ 229,000 Investment...
You are given the following information for Smashville, Inc.
Cost of goods sold:
$
229,000
Investment income:
$
2,500
Net sales:
$
374,000
Operating expense:
$
82,000
Interest expense:
$
7,400
Dividends:
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9,000
Tax rate:
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%
Current liabilities:
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18,000
Cash:
$
21,000
Long-term debt:
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23,000
Other assets:
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41,000
Fixed assets:
$
166,000
Other liabilities:
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5,000
Investments:
$
45,000
Operating assets:
$
37,000
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outstanding...
You are given the following information for Smashville, Inc. Cost of goods sold: $ 259,000 Investment...
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Investment income:
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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:
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26,000
During the year, Smashville, Inc., had 17,000 shares of stock
outstanding...
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You are given the following information for Smashville, Inc.
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Operating expense:
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Dividends:
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Cash:
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21,000
Long-term debt:
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Other assets:
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40,000
Fixed assets:
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Other liabilities:
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During the year, Smashville, Inc., had 17,000 shares of stock
outstanding...
You are given the following information for Smashville, Inc. Cost of goods sold: $ 170,000 Investment...
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$
170,000
Investment income:
$
3,200
Net sales:
$
308,000
Operating expense:
$
49,000
Interest expense:
$
7,400
Dividends:
$
14,000
Tax rate:
40
%
Current liabilities:
$
24,000
Cash:
$
21,000
Long-term debt:
$
6,000
Other assets:
$
40,000
Fixed assets:
$
162,000
Other liabilities:
$
5,000
Investments:
$
16,000
Operating assets:
$
51,000
Calculate the gross margin, the operating margin, return on
assets, and...
You are given the following information for Smashville, Inc. Cost of goods sold: $ 184,000 Investment...
You are given the following information for Smashville,
Inc.
Cost of goods sold:
$
184,000
Investment income:
$
1,600
Net sales:
$
387,000
Operating expense:
$
88,000
Interest expense:
$
7,400
Dividends:
$
6,000
Tax rate:
30
%
Current liabilities:
$
12,000
Cash:
$
21,000
Long-term debt:
$
32,000
Other assets:
$
40,000
Fixed assets:
$
125,000
Other liabilities:
$
5,000
Investments:
$
36,000
Operating assets:
$
64,000
During the year, Smashville, Inc., had 25,000 shares of stock
outstanding and...
You are given the following information for Smashville, Inc. Cost of goods sold: $ 175,000 Investment...
You are given the following information for Smashville,
Inc.
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$
175,000
Investment income:
$
2,800
Net sales:
$
237,000
Operating expense:
$
42,000
Interest expense:
$
7,400
Dividends:
$
10,000
Tax rate:
30
%
Current liabilities:
$
18,000
Cash:
$
21,000
Long-term debt:
$
10,000
Other assets:
$
36,000
Fixed assets:
$
89,000
Other liabilities:
$
5,000
Investments:
$
12,000
Operating assets:
$
24,000
During the year, Smashville, Inc., had 17,000 shares of stock
outstanding and...
You are given the following information for Smashville, Inc. Cost of goods sold: $224,000 Investment income:...
You are given the following information for Smashville, Inc.
Cost of goods sold:
$224,000
Investment income:
$2,400
Net sales:
$389,000
Operating expense:
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Interest expense:
$7,400
Dividends:
$15,000
Tax rate:
21
%
Current liabilities:
$24,000
Cash:
$21,000
Long-term debt:
$24,000
Other assets:
$40,000
Fixed assets:
$136,000
Other liabilities:
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Investments:
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Operating assets:
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17,000 shares of stock outstanding and depreciation expense of
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