Question

Dove, Inc., had additions to retained earnings for the year just ended of $634,000. The firm paid out $85,000 in cash dividends, and it has ending total equity of $7.29 million. a. If the company currently has 660,000 shares of common stock outstanding, what are earnings per share? Dividends per share? What is book value per share? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) b. If the stock currently sells for $29.90 per share, what is the market-to-book ratio? The price-earnings ratio? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) c. If total sales were $10.59 million, what is the price-sales ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Answer 1

A. The earnings per share is $1.09 per share

The Dividends per share is $0.13 per share

The book value per share is $11.04 per share

B. The market-to-book ratio is 2.71 times

The price-earnings ratio is 27.43 times

C. The price-sales ratio is 1.81 times

Step-by-step explanation:

(A) Earning per share = (Net income) ÷ (Number of shares)

where,

Net income = Retained earnings + dividend paid

= $634,000 + $85,000

= $719,000

And, the number of shares are 660,000 shares

Now put these values to the above formula

So, the value would equal to

= ($719,000) ÷ (660,000 shares)

= $1.09 per share

Dividend per share = (Total dividend) ÷ (number of shares)

= ($85,000) ÷ (660,000 shares)

= $0.13 per share

Book value per share = (Total equity) ÷ (number of shares)

= $7,290,000 ÷ (660,000 shares)

= $11.04 per share

(B) Market to book ratio = (Market price per share) ÷ (book value per share)

= $29.90 ÷ $11.04

= 2.71 times

Price-earnings ratio = (Market price per share) ÷ (Earning per share)

= $29.90 ÷ $1.09

= 27.43 times

(C) Price sales ratio = (Market price per share) ÷ (Total sales per share)

where,

Total sales per share = (total sales) ÷ (Number of shares)

= (10,590,000) ÷ (660,000 shares)

= $16.04 per share

So, the price sales ratio = $29.90 ÷ $16.04

= 1.81 times