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Rossdale, Inc., had additions to retained earnings for the year just ended of $6

ID: 2465297 • Letter: R

Question

Rossdale, Inc., had additions to retained earnings for the year just ended of $629,000. The firm paid out $110,000 in cash dividends, and it has ending total equity of $7.24 million.

If the stock currently sells for $29.40 per share, what is the market-to-book ratio? The price-earnings ratio? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)

If total sales were $10.54 million, what is the price-sales ratio? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)

Requirement 2:

If the stock currently sells for $29.40 per share, what is the market-to-book ratio? The price-earnings ratio? (Do not round intermediate calculations. Round your answers to 2 decimal places (e.g., 32.16).)

Explanation / Answer

1.

Total earnings before dividend:

retained earnings $629000

add cash dividends $110000

Total earnings $739000 , earning per share = 739000/ 724000 = 1.0207

book value per share = total equity + retained earnings /no. ofequity shares, assume that face value is $10

it shalll be = (7240000 + 629000) / 724000 = $10.86

1. market-to-book ratio =  Share price / BVPS

= 29.40/10.86= 2.71 times

2. Price earning ratio = market price per share/ earning price per share

= 29.40/1.0207

=28.80 times

2.

price sales ratio =( market priceper share x no. of shares )/ tota sales

= (29.40 x 724000)/ 10540000

=2.02