Question

ABC company has the following financial stats for the year: Earnings                               $1,000,000

  1. ABC company has the following financial stats for the year:

Earnings                               $1,000,000

Assets                                   $5,000,000

Liabilities                              $1,500,000

Shares outstanding                750,000

Market price                      $28 per share

Dividend                              $1.50/share

  1. Is ABC company a large, mid or small cap firm?

Calculate the following:

  1. Book value per share

  1. Price to Book Ratio

  1. Earnings per share

  1. Price/earnings Ratio

  1. What is the dividend yield?
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Homework Answers

Answer #1

a. Market Cap = Price * No of Shares =28*750000 = 21,000,000
Since Market cap is less than 2 billion hence small cap firm

b. Book Value per Share = (5,000,000-1,500,000)/ 750000 = 4.67

c. Price to Bool Ratio = 28/4.67 = 6

d. Earnings per Share =Earnings/No of Shares =1,000,000/750,000 = 1.33

e. Price to Earnings Ratio = 28/1.33 = 21

f. Dividend Yield = Dividend/Price =1.50/28 = 5.36%

Please Discuss in case of Doubt

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