Ames, Inc., has a current stock price of $44.50. For the past year, the company
ID: 2615758 • Letter: A
Question
Ames, Inc., has a current stock price of $44.50. For the past year, the company had net income of $6,400,000, total equity of $21,610,000, sales of $39,300,000, and 4.4 million shares of stock outstanding.
What are earnings per share (EPS)? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Earnings per share [] $
What is the price?earnings ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Price?earnings ratio [] times
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
What is the book value per share? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Book value per share [] $
What is the market-to-book ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Market-to-book ratio [ ] times
Explanation / Answer
1)
Earnings per share = Net income / number of shares outstanding
EPS = 6,400,000 / 4,400,000
EPS = $1.45
2)
Price earnings ratio = stock price / EPS
Price earnings ratio = 44.5 / 1.45
Price earnings ratio = $30.69
3)
Sales per share = sales / number of shares outstanding
Sales per share = 39,300,000 / 4,400,000
Sales per share = 8.93
Price sales ratio = stock price / sales per share
Price sales ratio = 44.5 / 8.93
Price sales ratio = 4.98
d)
Book value per share = Book value / number of shares outstanding
Book value per share = 21,610,000 / 4,400,000
Book value per share = 4.91
e)
Market to book ratio = Market capitalization / total book value
Market capitalization - 4,400,000 * 44.5 = 195,800,000
Market to book ratio = 195,800,000 / 21,610,000
Market to book ratio = 9.06
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