Question

Please do it by type not pics.

1.Silas 4-Wheeler, Inc. has an ROE of 17.56 percent, equity multiplier of 1.40, and a profit margin of 16.50 percent.

What is the total asset turnover and the capital intensity?

2.

You are considering an investment in Roxie's Bed & Breakfast Corp. During the last year, the firm's income statement listed an addition to retained earnings of $10.20 million and common stock dividends of $3.10 million. Roxie's year-end balance sheet shows common stockholders' equity of $44.9 million with 19 million shares of common stock outstanding. The common stock's market price per share was $9.30.

What is Roxie's Bed & Breakfast's book value per share?

What is Roxie's Bed & Breakfast's earnings per share?

Calculate the market-to-book ratio.

Answer 1

1)

Given, Return on equity (ROE) ie Net annual income/Total Equity=17.56%

Equity multiplier ie Total assets/ Total equity=1.40

and profit margin ir Net income/ Total sales=16.5%

TO calculate: Assets turnover ratio and capital intensity ratio:

Solution:

Step 1

Assets turnover ratio= Total sales/ TOtal assets

=(p/16.50)/ (100p*1.40)/17.56 =0.007601

Step 2

And capital intensity ratio= Total assets/Total sales

=(1.40*100p/17.56)/(p/16.50)

=0.483

where p is the profit margin or the return

part b)

Book value per share= Total equity or the assets of the firm/Number of shares outstanding

=$44.9 million/19 million shares=2.363

Earning per share= Total earnings available for equity shareholders/ No. of shares outstanind

=(Retained earnings+Dividend)/N

=$(10.20+3.10)/10

=$1.33 per share

Market to book ratio=MArket capitalisation/ Tptal book value

=$9.30*19 million/44.9*19 million

=0.207