What is the price-earnings ratio?, What are the dividends per share?, What is th

Question

What is the price-earnings ratio?, What are the dividends per share?, What is the market-to-book ratio at the end of 2015?, and If the company’s growth rate is 7 percent, what is the PEG ratio?

Some recent financial statements for Smolira Golf Corp. follow SMOLIRA GOLF CORP 2014 and 2015 Balance Sheets Assets Liabilities and Owners' Equity 2014 2014 2015 2015 Current assets Current liabilities Cash Accounts receivable Inventory $ 23,996 13,948 27,462 $ 25,600 16,700 28,600 Accounts payable Notes payable Other $ 24,684 16,000 13,071 $ 28,600 12,300 19,100 Total $65,406 $70,900 Total $ 53,755 $60,000 Long-term debt Owners' equity $84,000 $ 89,000 Common stock and paid-in surplus Accumulated retained earnings $ 60,000 207,346 $60,000 223,000 Fixed assets Net plant and equipment $339,695 $361,100 Total $267,346 $283,000 Total assets $405,101 $432,000 Total liabilities and owners' equity $405,101 $432,000 SMOLIRA GOLF CORP 2015 Income Statement Sales Cost of goods sold Depreciation $376,068 260,000 49,450 Earnings before interest and taxes Interest paid $ 66,618 15,800 Taxable income Taxes (20%) $ 50,818 10,164 Net income $ 40,654 Dividends Retained earnings $25,000 15,654

Explanation / Answer

Answer:

a) Price earning ratio = Market price of share/EPS = $47/$2.0327 = 23.12

(EPS = Net Income/No of equity shares outstanding) = $40,654/20,000 = $2.0327 per share)

b) Dividends per share = Total Dividend/No of equity shares outstanding = $25,000/20,000 = $1.25

c) Market to book ratio = Market price of share/Book price of share = $47/$14.15 = 3.32

(Book value per share = Share holders equity/No of shares outstanding = $283,000/20,000 = $14.15

d) PEG ratio = PE ratio/Growth rate = 23.12/7 = 3.30

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