Question

Wilson, Inc., has a current stock price of $43.50. For the past year, the company had net income of $7,050,000, total equity of $21,740,000, sales of $40,600,000, and 5.7 million shares of stock outstanding.What are earnings per share (EPS)?What is the price−earnings ratio?What is the price−sales ratio?What is the book value per share?What is the market-to-book ratio?

Answer 1

Answer:

1. $1.24

2. 35.17

3. 6.107

4. $3.814

5. 11.405

Explanation:

Given that,

Current stock price = $43.50

Net income = $7,050,000

Total equity = $21,740,000

Sales = $40,600,000

shares of stock outstanding = 5.7 million

1. Earnings per share:

= Net income ÷ shares of stock outstanding

= $7,050,000 ÷ 5.7 million

= $1.24

2. Price−earnings ratio:

= Market price per share ÷ EPS

= $43.50 ÷ $1.24

= 35.17

3. Price−sales ratio:

= Market capitalization ÷ Total sales

= ($43.50 × 5,700,000) ÷ $40,600,000

= $247,950,000 ÷ $40,600,000

= 6.107

4. Book value per share:

= Shareholder's equity ÷ shares of stock outstanding

= $21,740,000 ÷ 5,700,000

= $3.814

5. Market-to-book ratio:

= Market value per share ÷ Book value per share

= $43.50 ÷ $3.814

= 11.405