Question

The Amherst Company has a net profits of ​$88 ​million, sales of ​$124 ​million, and 2.2 million shares of common stock outstanding. The company has total assets of ​$71 million and total​ stockholders' equity of ​$37 million. It pays ​$1.33 per share in common​ dividends, and the stock trades at $27 per share. Given this​ information, determine the​ following:

a. ​Amherst's EPS.

b. ​Amherst's book value per share and​ price-to-book-value ratio.

c. The​ firm's P/E ratio.

d. The​ company's net profit margin.

e. The​ stock's dividend payout ratio and its dividend yield.

f. The​ stock's PEG​ ratio, given that the​ company's earnings have been growing at an average annual rate of 9.6​%.

Answer 1

1.
EPS=Net Income/Number of shares=88/2.2=40

2.
Book Value per share=Book value of equity/Number of shares=37/2.2=16.8181818181818

3.
Price to Book Value ratio=Price/Book Value=27/(37/2.2)=1.60540540540541

4.
P/E ratio=Price/EPS=37/(88/2.2)=0.925

5.
Net Profit Margin=Net Income/Sales=88/124=70.9677419354839%

6.
Dividend Payout Ratio=Dividend per share*Number shares/Net Profits=1.33*2.2/88=3.325%

7.
Dividend Yield=Dividend/Price=1.33/27=0.0492592592592593

8.
PEG Ratio=(Price/EPS)/g=37/(88/2.2)*1/9.6=0.0963541666666667