You are considering an investment in Roxie\'s Bed & Breakfast Corp. During the l

Question

You are considering an investment in Roxie's Bed & Breakfast Corp. During the last year, the firm's income statement listed an addition to retained earnings of $16.20 million and common stock dividends of $1.30 million. Roxie's year-end balance sheet shows common stockholders' equity of $55.9 million with 19 million shares of common stock outstanding. The common stock's market price per share was $8.10.

What is Roxie's Bed & Breakfast's book value per share? (Round your answer to 2 decimal places.)

What is Roxie's Bed & Breakfast's earnings per share? (Round your answer to 2 decimal places.)

You are considering an investment in Roxie's Bed & Breakfast Corp. During the last year, the firm's income statement listed an addition to retained earnings of $16.20 million and common stock dividends of $1.30 million. Roxie's year-end balance sheet shows common stockholders' equity of $55.9 million with 19 million shares of common stock outstanding. The common stock's market price per share was $8.10.

Explanation / Answer

1)Book value per share = book value of equity /number of shares outstanding

        = 55.9/19

        = $ 2.94 per share

2)Earning per share= earning available to common shareholders/ number of common stock outstanding

= 17.5 / 19

    = $ .92 per share

**Net income = 16.2+1.3=17.50

3) Market-to-book ratio =Market value per share/book value per share

      = 8.10/ 2.94

     = 2.76

4)PE ratio =market value per share /earning per share

          = 8.1 / .92

         = 8.80

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