Question

Jackson company has the following financial information for their most recent fiscal year: Revenues Cost of Sales Interest Expense Taxes Long term debt Outstanding Total Equity The company has had an average of 16,000 shares outstanding over the past year and their shares are currently trading in the market at $22 per share. What is their Earnings per share? What is their Price to Earnings multiple? What is their Long Term Debt to Equity Ratio? What is the total Market Value of their shares?

Answer 1

The calculations are shown below

Step-by-step explanation:

The computations are shown below:

But before that, first we have to prepare the income statement so that the values could come

Particulars Amount

Revenues $99,700

Less: Cost of sales -$64,700

Gross profit $35,000

Less: Interest expenses -$1,800

Earnings before tax $33,200

Less: Taxes -$11,620

Net income $21,580

So, the calculations are shown below:

1. Earnings per share = Net income ÷ Common stock outstanding

= $21,580 ÷ 16,000 shares

= $1.35 per share

2. Price earnings ratio = Stock price per share ÷ Earnings per share

= $22 ÷ $1.35

= 16.3 times

3. Long term debt to equity ratio = Long term debt ÷ Total equity

= $45,800 ÷ $120,000

= 0.38 times

4. Total market value = Number of shares outstanding × Market price per share

= 16,000 shares × $22

= $352,000