Question

o 6. Using the information from the financial statements complet 1. PE ratio 2. Price Book ratio 3. Pricel Sales ratio 4. Days Sales Outstanding at 5. Inventory Turnoverato 6. Debt ratio 7. Return on Equity ratio

Sales 210,000

Operating Cost 160,000

EBITDA 50,000

Depreciation 6,000

EBIT 44,000

Interest 5,350

EBT 38,650

TAXES(25%) 9,662

Net Income 28,988

Dividends Paid 19,718

stock price per share as of Dec. 31 2019 $25

Answer 1

1. P/E RATIO=  MARKET PRICE PER SHARE $\div$ EARNINGS PER SHARE

EARNINGS PER SHARE = NET INCOME $\div$ NO OF OUTSTANDING SHARES

= $28988 $\div$ 4000 = $7.25

THEREFORE, P/E RATIO= $25 $\div$ $7.25 = 3.45

2. P/B RATIO= MARKET PRICE PER SHARE $\div$ BOOK VALUE PER SHARE

BOOK VALUE PER SHARE = (TOTAL ASSETS -TOTAL LIABILITIES) $\div$ NO OF OUTSTANDING SHARES

= ($131,320 - $45,100)$\div$ 4000

= $21.56

  THEREFORE, P/B RATIO= $25 $\div$ $21.56 = 1.16

3. P/S RATIO= MARKET PRICE PER SHARE $\div$ SALES PER SHARE

SALES PER SHARE= TOTAL SALES $\div$ NO OF OUTSTANDING SHARES

= $210,000 $\div$ 4000

= $52.5

THEREFORE, P/S RATIO= $25 $\div$ $52.5 = .48

4. DAY SALES OUTSTANDING RATIO= ACCOUNTS RECEIVABLE $\div$ AVERAGE SALES PER DAY

= $35,000$\div$($210,000$\div$365)

= 60.83

5.INVENTORY TURNOVER RATIO = SALES $\div$ INVENTORY

= $210,000 $\div$ $33,320 = 6.30

6. DEBT RATIO= TOTAL DEBT $\div$ TOTAL ASSETS

= $45,100 $\div$ $131,320

= .34

7. RETURN ON EQUITY RATIO= NET INCOME $\div$ SHAREHOLDERS EQUITY

= $28,988 $\div$ $86,220

= .34