Question

(in millions) 2014 2013 Revenue 23,949 23,303 Net income after tax 716 602 Total Shareholders' Equity...

(in millions) 2014 2013
Revenue 23,949 23,303
Net income after tax 716 602
Total Shareholders' Equity 6,003 5,837
Shares outstanding(in millions) 22,695 19,136
Closing market price(in pence) 234 225

For fiscal year 2014, calculate (use two decimal points):

a. The total market value of the company

b. The market premium per share

c. The price-to-book ratio (P/B)

d. The price-to-earnings ratio (P/E)

e. The price-to-sales ratio (P/S)

Homework Answers

Answer #1

a. The total market value of the company

Shares outstanding(in millions) x Closing market price(in pence) = 22695 x 2.34 = $53106.3millions

b. The market premium per share

Market price per share - Book value per share = $2.34 - $0.265 = $2.075

Book value per share = $6003millions / 22695millions= $0.265 per share

c. The price-to-book ratio (P/B) = Market price per share / Book value per share = 2.34 / 0.265 = 8.83

d. The price-to-earnings ratio (P/E)

P/E Ratio = Market Price / EPS = $2.34/$0.0315 = 74.29

EPS = Net Income after tax / Shares outstanding = $716millions/22695millions = $0.0315

e. The price-to-sales ratio (P/S)

Market price per share / Sales per share = $2.34/$1.055 = 2.22

Sales per share = $23949millions / 22695millions = $1.055

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