Question

Ames, Inc., has a current stock price of $44.50. For the past year, the company had net income of $6,400,000, total equity of $21,610,000, sales of $39,300,000, and 4.4 million shares of stock outstanding.

What are earnings per share (EPS)? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Earnings per share [] $

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 is the book value per share? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Book value per share [] $

What is the market-to-book ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Market-to-book ratio [ ] times

Answer 1

1)

Earnings per share = Net income / number of shares outstanding

EPS = 6,400,000 / 4,400,000

EPS = $1.45

2)

Price earnings ratio = stock price / EPS

Price earnings ratio = 44.5 / 1.45

Price earnings ratio = $30.69

3)

Sales per share = sales / number of shares outstanding

Sales per share = 39,300,000 / 4,400,000

Sales per share = 8.93

Price sales ratio = stock price / sales per share

Price sales ratio = 44.5 / 8.93

Price sales ratio = 4.98

d)

Book value per share = Book value / number of shares outstanding

Book value per share = 21,610,000 / 4,400,000

Book value per share = 4.91

e)

Market to book ratio = Market capitalization / total book value

Market capitalization - 4,400,000 * 44.5 = 195,800,000

Market to book ratio = 195,800,000 / 21,610,000

Market to book ratio = 9.06