You are considering an investment in Roxie\'s Bed & Breakfast Corp. During the l
ID: 2731665 • Letter: Y
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 $15.60 million and common stock dividends of $1.40 million. Roxie's year-end balance sheet shows common stockholders' equity of $54.8 million with 18 million shares of common stock outstanding. The common stock's market price per share was $8.20.
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.)
What is Roxie's Bed & Breakfast's book value per share? (Round your answer to 2 decimal places.)
Explanation / Answer
Book Value per share = 54.8 / 18 = 3.04
Earning Per Share = 15.60 / 18 = 0.87
Market to book ratio = Market Value of firm / Book Value of firm = (8.20 x 18) / 54.8 = 2.69
Price earning ratio = MPS / EPS = 8.20 / .87 = 9.43
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