Given the following data (in millions of dollars): contributedcapital in excess of par, $70;...

Given the following data (in millions of dollars): contributed capital in excess of par,

$70; depreciation expense, $13; interest expense, $10; earnings after taxes, $32;

common stock ($1 par), $8; earnings before interest and taxes, $50; fixed assets, $73;

retained earnings, $82. The common stock price is $56. Compute the numerical

values of net fixed assets, earnings per share, price-earnings ratio, interest coverage

ratio, book value per share, and after-tax cash flow.

Solutions

Expert Solution

1. values of net fixed assets = Fixed Assets - Depreciation

values of net fixed assets = 73 - 13

values of net fixed assets = $60

2. earnings per share = Earnings after tax / Shares O/s

earnings per share = 32 / 8

earnings per share = $4 per share

3. price-earnings ratio = Market price / Earnings per share = $56 / 4 = 14 times

4. interest coverage ratio = EBIT / Interest Expenses = 50 / 10 = 5 times

5. book value per share = (Common stock + retained earnings + contributed capital in excess of par) / Shares O/s

5. book value per share = (8 + 82 + 70) / 8

book value per share = $20 per share

6. after-tax cash flow = Earnings after tax + depreciation

after-tax cash flow = 32 + 13

after-tax cash flow = $45

jeff jeffy answered 2 years ago

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