Calculating Market Value Ratios
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Company A has additions to retained earnings for the year end of $300,000. The firm paid out $220,000 in cash dividends, and it has ending total equity of $5 million. If Comapany A currently has 300,000 shares of common stock outstanding, what are earnings per share? Dividends per share? What is book value per share? If the stock currently sells for $25 per share, what is the market-to-book ratio? The price earnings ratio?
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The solution explains how to calculate various market value ratios.
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Earnings per share (EPS) = Net Income/Number of shares outstanding
Net Income = Additions to retained earnings + dividends ( since the net income gets diidend between ...
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