| Some recent financial statements for Smolira Golf, Inc., follow. |
| SMOLIRA GOLF, INC. Balance Sheets as of December 31, 2018 and 2019 |
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| 2018 | 2019 | 2018 | 2019 | |||||||
| Assets | Liabilities and Owners’ Equity | |||||||||
| Current assets | Current liabilities | |||||||||
| Cash | $ | 3,251 | $ | 3,407 | Accounts payable | $ | 2,143 | $ | 2,580 | |
| Accounts receivable | 4,777 | 5,801 | Notes payable | 1,740 | 2,096 | |||||
| Inventory | 12,438 | 13,802 | Other | 88 | 105 | |||||
| Total | $ | 20,466 | $ | 23,010 | Total | $ | 3,971 | $ | 4,781 | |
| Long-term debt | $ | 13,600 | $ | 16,360 | ||||||
| Owners’ equity | ||||||||||
| Common stock | ||||||||||
| and paid-in surplus | $ | 37,000 | $ | 37,000 | ||||||
| Fixed assets | Accumulated retained earnings | 15,644 | 38,966 | |||||||
| Net plant and equipment | $ | 49,749 | $ | 74,097 | Total | $ | 52,644 | $ | 75,966 | |
| Total assets | $ | 70,215 | $ | 97,107 | Total liabilities and owners’ equity | $ | 70,215 | $ | 97,107 | |
| SMOLIRA GOLF, INC. 2019 Income Statement |
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| Sales | $ | 186,970 | ||
| Cost of goods sold | 126,003 | |||
| Depreciation | 5,353 | |||
| EBIT | $ | 55,614 | ||
| Interest paid | 1,450 | |||
| Taxable income | $ | 54,164 | ||
| Taxes | 18,957 | |||
| Net income | $ | 35,207 | ||
| Dividends | $ | 11,885 | ||
| Retained earnings | 23,322 | |||
| Smolira Golf has 12,000 shares of common stock outstanding, and the market price for a share of stock at the end of 2019 was $75. | |
| a. | What is the price-earnings ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
| b. | What is the price-sales ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
| c. | What are the dividends per share? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
| d. | What is the market-to-book ratio at the end of 2019? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
Answer a :
Price-earning ratio = Price per Share / Earning per share
= 75 / 2.934
= 25.56
where,
Earning per share = Net Income / No. of shares
= 35207/12000 ==>2.934
Answer B : Price- sales Ratio = Price per share/sales per share
= 75 /15.581
= 4.81
where sales per share = sales / no. of share
= 186970/12000 ==> 15.581
Answer c :
Dividend per share = Dividend paid / no. of share
= 11885/12000
= 0.99
Answer d : Market-to-book ratio = Market value per share / Book value per share
=75/6.3305
= 11.85
where book value per share is Total of coomon stock and retained earning / no. of share
Book value per share = 75966/12000 ==>6.3305
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