| Some recent financial statements for Smolira Golf, Inc., follow. |
| SMOLIRA GOLF, INC. Balance Sheets as of December 31, 2018 and 2019 |
||||||||||
| 2018 | 2019 | 2018 | 2019 | |||||||
| Assets | Liabilities and Owners’ Equity | |||||||||
| Current assets | Current liabilities | |||||||||
| Cash | $ | 5,298 | $ | 5,827 | Accounts payable | $ | 3,754 | $ | 3,986 | |
| Accounts receivable | 7,707 | 8,477 | Notes payable | 3,045 | 3,318 | |||||
| Inventory | 12,150 | 21,956 | Other | 152 | 179 | |||||
| Total | $ | 25,155 | $ | 36,260 | Total | $ | 6,951 | $ | 7,483 | |
| Long-term debt | $ | 24,700 | $ | 16,000 | ||||||
| Owners’ equity | ||||||||||
| Common stock | ||||||||||
| and paid-in surplus | $ | 40,000 | $ | 37,000 | ||||||
| Fixed assets | Accumulated retained earnings | 28,805 | 55,189 | |||||||
| Net plant and equipment | $ | 75,301 | $ | 79,412 | Total | $ | 68,805 | $ | 92,189 | |
| Total assets | $ | 100,456 | $ | 115,672 | Total liabilities and owners’ equity | $ | 100,456 | $ | 115,672 | |
| SMOLIRA GOLF, INC. 2019 Income Statement |
||||
| Sales | $ | 229,854 | ||
| Cost of goods sold | 184,317 | |||
| Depreciation | 8,730 | |||
| EBIT | $ | 36,807 | ||
| Interest paid | 1,811 | |||
| Taxable income | $ | 34,996 | ||
| Taxes | 7,349 | |||
| Net income | $ | 27,647 | ||
| Dividends | $ | 16,000 | ||
| Retained earnings | 11,647 | |||
|
Smolira Golf has 10,000 shares of common stock outstanding, and the market price for a share of stock at the end of 2019 was $73. |
| 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.) |
a) Price Earning Ratio or P/E Ratio = Market value per share / Earnings per share
Market value per share = $73
Earnings per share = Net profit / No.of share
= $27,647 / 10,000
= $ 2.7647
So, P/E Ratio = $73 / $2.7647
= 26.40
b) Price-to-sales ratio = company's market capitalization / total sales or revenue
Where ,
Company's market capitalization = Number of outstanding shares x share price
= 10,000 x $73
= $ 730,000
Price-to-sales ratio = $ 730,000 / $ 229,854
= 3.176
c) Dividends per share = Total Dividend / No of share holders
= $16,000 / 10,000
= $1.6 per share
Get Answers For Free
Most questions answered within 1 hours.