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 $13.80 million and common stock dividends of $1.70 million. Roxie's year-end balance sheet shows common stockholders' equity of $51.5 million with 15 million shares of common stock outstanding. The common stock's market price per share was $8.50.

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 $13.80 million and common stock dividends of $1.70 million. Roxie's year-end balance sheet shows common stockholders' equity of $51.5 million with 15 million shares of common stock outstanding. The common stock's market price per share was $8.50.

Explanation / Answer

Answer: Book value per share = $51.5 m. / 15m. = $3.43 per share

Earnings per share = ($13.80m. +$1.70m.) / 15m. = $1.03 per share

Market-to-book ratio = $8.50/$3.43=2.48 times

Price-earnings (PE) ratio =8.50/1.03= 8.25 times

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