CFIN -STUDENT EDITION-ACCESS >CUSTOM<
6th Edition
ISBN: 9780357752951
Author: BESLEY
Publisher: CENGAGE C
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Chapter 2, Problem 14PROB
Summary Introduction
Calculation of P/E ratio and M/B ratio. IIS has $35 million of common equity, $14 million of net income, and 7 million shares of common shares outstanding. The market price of the common stock is $8 per share.
The price to earnings ratio (P/E ratio) is the ratio of firm's current market price and earnings per share. It gives an idea about the dollar amount an investor can invest in the firm in order to earn one dollar of that firm's earnings.
Earnings per share (EPS) is the firm's profit earned for each share. It is calculated by dividing the firm's total profit with total number of outstanding shares.
Market to book ratio (M/B ratio) is the ratio which shows the relationship between the book value of the stock in the
Book value per share is the value which measures the firm's net asset value on a per share basis.
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I am not getting the correct Line of Credit for this question (LOC)? Please assist.
Financing Deficit
Stevens Textile Corporation's 2019 financial statements are shown below: Just need the correct LOC?
Balance Sheet as of December 31, 2019 (Thousands of Dollars)
Cash
$ 1,080
Accounts payable
$ 4,320
Receivables
6,480
Accruals
2,880
Inventories
9,000
Line of credit
0
Total current assets
$16,560
Notes payable
2,100
Net fixed assets
12,600
Total current liabilities
$ 9,300
Mortgage bonds
3,500
Common stock
3,500
Retained earnings
12,860
Total assets
$29,160
Total liabilities and equity
$29,160
Income Statement for December 31, 2019 (Thousands of Dollars)
Sales
$36,000
Operating costs
34,000
Earnings before interest and taxes
$ 2,000
Interest
160
Pre-tax earnings
$ 1,840
Taxes (25%)
460
Net income
$ 1,380
Dividends (40%)
$ 552
Addition to retained earnings
$ 828
Stevens grew rapidly in 2019 and…
Chapter 2 Solutions
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