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  • Finman 9 Answer Key

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    Given the following information about WAM Inc.: net income of $200,000, earnings per share of $2, market/book ratio of 0.2, and stockholders' equity of $2,000,000, to calculate the market price per share: - Stockholders' equity is $2,000,000 - With a market/book ratio of 0.2, the market value is 0.2 * $2,000,000 = $400,000 - There are 200,000 shares (earnings per share of $2, net income of $200,000) - So the market price per share is the market value / number of shares = $400,000 /

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    Given the following information about WAM Inc.: net income of $200,000, earnings per share of $2, market/book ratio of 0.2, and stockholders' equity of $2,000,000, to calculate the market price per share: - Stockholders' equity is $2,000,000 - With a market/book ratio of 0.2, the market value is 0.2 * $2,000,000 = $400,000 - There are 200,000 shares (earnings per share of $2, net income of $200,000) - So the market price per share is the market value / number of shares = $400,000 /

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    33 views1 page

    Finman 9 Answer Key

    Uploaded by

    pompom
    Given the following information about WAM Inc.: net income of $200,000, earnings per share of $2, market/book ratio of 0.2, and stockholders' equity of $2,000,000, to calculate the market price per share: - Stockholders' equity is $2,000,000 - With a market/book ratio of 0.2, the market value is 0.2 * $2,000,000 = $400,000 - There are 200,000 shares (earnings per share of $2, net income of $200,000) - So the market price per share is the market value / number of shares = $400,000 /

    Copyright:

    © All Rights Reserved
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    of 1

    Given the following information, calculate the market price per share of WAM

    Inc.:

    Net income $200,000.00


    Earnings per share $2.00
    Stockholders’ equity $2,000,000.00
    Market/Book ratio 0.20

    a. $20.00
    b. $ 8.00
    c. $ 4.00
    d. $ 2.00
    e. $ 1.00

    Market/book ratio Answer: c Diff: E


    41. Meyersdale Office Supplies has common equity of $40 million. The company’s
    stock price is $80 per share and its market/book ratio is 4.0. How many
    shares of stock does the company have outstanding?

    a. 500,000
    b. 125,000
    c. 2,000,000
    d. 800,000,000
    e. Insufficient information.

    Chapter 3 - Page 12
    Market/book ratio Answer: e Diff: E N
    42. Strack Houseware Supplies Inc. has $2 billion in total assets. The other side
    of its balance sheet consists of $0.2 billion in current liabilities, $0.6
    billion in long-term debt, and $1.2 billion in common equity. The company
    has 300 million shares of common stock outstanding, and its stock price is
    $20 per share. What is Strack’s market/book ratio?

    a. 1.25
    b. 2.65
    c. 3.15
    d. 4.40
    e. 5.00

    ROA Answer: d Diff: E


    43. A firm has a profit margin of 15 percent on sales of $20,000,000. If the firm
    has debt of $7,500,000, total assets of $22,500,000, and an after tax
    interest cost on total debt of 5 percent, what is the firm’s ROA?

    a. 8.4%
    b. 10.9%
    c. 12.0%
    d. 13.3%
    e. 15.1%

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