Question

Blitz Corp. had total sales of $3,530,000 last year and has 119,000 shares of stock outstanding....

Blitz Corp. had total sales of $3,530,000 last year and has 119,000 shares of stock outstanding. The benchmark PS is 1.86 times. What stock price would you consider appropriate?

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Answer #1
Given,
Sales $3,530,000
Shares outstanding          119,000
PS ratio 1.86 times
We know,
P/S ratio= Market capitalisation/Total sales
1.86= Market capitalisation/3530000
Market capitalisation $6,565,800
Stock price= Market capitalisation/Shares outstanding
$6565800/119000
$55.1747899
Stock price= $55.17 (rounded off to two decimal places)
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