Question
Company SSD is trying to estimate their equity multiples based on the following information: High-growth period = 6 years, net income of $185 on sales
Company SSD is trying to estimate their equity multiples based on the following information: High-growth period = 6 years, net income of $185 on sales of $1,450, with book value of equity of $1,125. During the high-growth period, the payout ratio will be 15%, and the firms beta of 1.25, risk-free rate of 2% and market risk premium of 5% will remain constant. After the 6-year high-growth period, the growth rate in earnings will drop to 3%. Using this information, determine the companys P/E, PEG, Price to Book Value and Price to Sales ratios. Show the calculation in details.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started