Question

Some recent financial statements for Smolira Golf, Inc., follow. SMOLIRA GOLF, INC. Balance Sheets as of...

Some recent financial statements for Smolira Golf, Inc., follow.

SMOLIRA GOLF, INC.
Balance Sheets as of December 31, 2015 and 2016
2015 2016 2015 2016
Assets Liabilities and Owners’ Equity
Current assets Current liabilities
Cash $ 2,821 $ 2,657 Accounts payable $ 2,218 $ 2,730
Accounts receivable 4,702 5,651 Notes payable 1,815 2,246
Inventory 12,738 13,652 Other 103 120
Total $ 20,261 $ 21,960 Total $ 4,136 $ 5,096
Long-term debt $ 14,600 $ 17,360
Owners’ equity
Common stock and paid-in surplus $ 44,500 $ 44,500
Fixed assets Accumulated retained earnings 15,719 40,061
Net plant and equipment $ 58,694 $ 85,057 Total $ 60,219 $ 84,561
Total assets $ 78,955 $ 107,017 Total liabilities and owners’ equity $ 78,955 $ 107,017
SMOLIRA GOLF, INC.
2016 Income Statement
Sales $ 189,970
Cost of goods sold 127,503
Depreciation 5,203
EBIT $ 57,264
Interest paid 1,300
Taxable income $ 55,964
Taxes 19,587
Net income $ 36,377
Dividends $ 12,035
Retained earnings 24,342

Smolira Golf has 11,000 shares of common stock outstanding, and the market price for a share of stock at the end of 2016 was $90.
  
What is the price–earnings ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
  
Price–earnings ratio             times
  
What is the price–sales ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
  
Price–sales ratio             times
  
What are the dividends per share? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
  
Dividends per share            $
  
What is the market-to-book ratio at the end of 2016? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
  
Market-to-book ratio             times

Homework Answers

Answer #1

Price-Earnings Ratio

Earnings per share (EPS) = Net Income / Number of shares

= $36,377 / 11,000 shares

= $3.31 per share

Price-Earnings Ratio = Market Price per share / Price-Earnings Ratio

= $90.00 / $3.31 per share

= 27.21 Times

Price–sales ratio

Sales per share = Sales / Number of shares

= $189,970 / 11,000 shares

= $17.27 per share

Price–sales ratio = Market Price per share / sales per share

= $90.00 / $17.27

= 5.21 Times

Dividend per share

Dividend per share = Dividend paid / Number of shares

= $12,035 / 11,000 shares

= $1.09 per share

Market-to-book ratio

Book value per share = Stockholders Equity / Number of shares

= $84,5461 / 11,000 shares

= $7.69 per share

Market-to-book ratio = Market Price per share / Book value per share

= $90.00 /$7.69

= 11.71 Times

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