(Market value analysis) The balance sheet for Larry Underwood Motors shows a book value of stockholders' equity (book value per share x total shares outstanding) of $1,367,000. Furthermore, the firm's income statement for the year just ended has a net income of $514,000, which is $0.254 per share of common stock outstanding. The price-earnings ratio for firms similar to Underwood Motors is 18.52. a. What price would you expect Underwood Motors shares to sell for? b. What is the book value per share for Underwood's shares? a. What price would you expect Underwood Motors shares to sell for? The market price per share is $ 4.70 (Round to the nearest cent) b. What is the book value per share for Underwood's shares? The book value per share is S (Round to the nearest cent)
(Market value analysis) The balance sheet for Larry Underwood Motors shows a book value of stockholders' equity (book value per share x total shares outstanding) of $1,367,000. Furthermore, the firm's income statement for the year just ended has a net income of $514,000, which is $0.254 per share of common stock outstanding. The price-earnings ratio for firms similar to Underwood Motors is 18.52. a. What price would you expect Underwood Motors shares to sell for? b. What is the book value per share for Underwood's shares? a. What price would you expect Underwood Motors shares to sell for? The market price per share is $ 4.70 (Round to the nearest cent) b. What is the book value per share for Underwood's shares? The book value per share is S (Round to the nearest cent)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.
Return on Equity
The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.
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Transcribed Image Text:b) shares outstandiNG = NET INCOME
CARNINGS PERSHARE
514000 = 2,023, 622
$0.254
Transcribed Image Text:(Market value analysis) The balance sheet for Larry Underwood Motors shows a book value of stockholders' equity (book value per share x total shares outstanding) of $1,367,000. Furthermore,
the firm's income statement for the year just ended has a net income of $514,000, which is $0.254 per share of common stock outstanding. The price-earnings ratio for firms similar to Underwood
Motors is 18.52.
a. What price would you expect Underwood Motors shares to sell for?
b. What is the book value per share for Underwood's shares?
a. What price would you expect Underwood Motors shares to sell for?
The market price per share is $4.70. (Round to the nearest cent.)
b. What is the book value per share for Underwood's shares?
The book value per share is $. (Round to the nearest cent.)
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