The balance sheet for Larry Underwood Motors shows a book value of stockholders' equity (book value per share×total shares outstanding) of $1,300,000. Furthermore, the firm's income statement for the year just ended has a net income of $536,000, which is $0.264 per share of common stock outstanding. The price-earnings ratio for firms similar to Underwood Motors is 20.89. a. What price would you expect Underwood Motors shares to sell for? b. What is the book value per share for Underwood's shares?
The balance sheet for Larry Underwood Motors shows a book value of stockholders' equity (book value per share×total shares outstanding) of $1,300,000. Furthermore, the firm's income statement for the year just ended has a net income of $536,000, which is $0.264 per share of common stock outstanding. The price-earnings ratio for firms similar to Underwood Motors is 20.89. a. What price would you expect Underwood Motors shares to sell for? b. What is the book value per share for Underwood's shares?
Century 21 Accounting General Journal
11th Edition
ISBN:9781337680059
Author:Gilbertson
Publisher:Gilbertson
Chapter17: Financial Statement Analysis
Section: Chapter Questions
Problem 4AP
Related questions
Question
The balance sheet for Larry Underwood Motors shows a book value of stockholders' equity (book value per
share×total
shares outstanding) of
$1,300,000.
Furthermore, the firm's income statement for the year just ended has a net income of
$536,000,
which is
$0.264
per share of common stock outstanding. The price-earnings ratio for firms similar to Underwood Motors is
20.89.
a. What price would you expect Underwood Motors shares to sell for?
b. What is the book value per share for Underwood's shares?
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