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Financial statement analysis - Yi Corporation

Can you help me with these price to book value problems?


Yi Corporation has no preferred stock and reports the following:

Earnings per share $1.80
Dividends per share $0.72
Book Value per share-end of year $8.62

a. If price-to-book value at the end of 2009 equals 1.00, and return on beginning of year equity is expected to remain constant, then cost of equity (to nearest percent) equals:
A) 15%
B) 21%
C) 24%
D) Not determinable

b. If Yi Corporation had preferred stock outstanding then the earnings per share amount of $1.80 would be
A) unchanged.
B) cannot be determined.
C) greater than $1.80.
D) less than $1.80.

c. Interim financial reports are less _________ than annual financial reports.
A) relevant
B) consistent
C) timely
D) reliable

Solution Preview

Question A
Price to book value = 1 = Price/$8.62
Price = $8.62
Cost of equity = $0.72/$8.62 = 8.35%
NOTE: The correct answer is not in the choices. ...

Solution Summary

Yi Corporations for financial statement analysis is examined.