Abbott Laboratories (ABT) engages in the discovery, development, manufacture, an

Question

Abbott Laboratories (ABT) engages in the discovery, development, manufacture, and sale of a line of health care and pharmaceutical products. Below you will find selected information from Value Line. Use the Value Line estimated 2012 figures as the actual year-end figures for the company. The beta reported was .6 and the risk-free rate was 3.21 percent. Assume a market risk premium of 6 percent.

Using the P/E, P/CF, and P/S ratios, estimate the 2013 share price for Abbott Laboratories. Use the average stock price each year to calculate the price ratios. (Do not round intermediate calculations. Round your answers to 2 decimal places. Omit the "$" sign in your response.)

Please help with this question I cannot figure out the average stock price that connect wants me to use!!!!

Abbott Laboratories (ABT) engages in the discovery, development, manufacture, and sale of a line of health care and pharmaceutical products. Below you will find selected information from Value Line. Use the Value Line estimated 2012 figures as the actual year-end figures for the company. The beta reported was .6 and the risk-free rate was 3.21 percent. Assume a market risk premium of 6 percent.

Explanation / Answer

Average price in 2012 = (High price in 2012 + low price in 2012)/2

(57.4+43.7)/2 = 50.55 per share

Return on common equity reported in 2013 is $50.55.

P/E ratio = price per share/ Earnings per share

                = 50.55 /5.35

                 = 9.45

P/CF ratio = price per share/ cash flow per share

                  = 50.55/7.30

                  =6.92

P/S ratio = Price per share/ Sales per share

               =50.55/21.05

                 = 2.40

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.