Question
Find below the Companys balance sheet for year-end 2525. Balance Sheet, 12/31/2525 Cash $555 $960 Current liabilities Inventory $855 $350 Debt PP&E $1,500 $1,600 Stockholders
Find below the Companys balance sheet for year-end 2525. Balance Sheet, 12/31/2525 Cash $555 $960 Current liabilities Inventory $855 $350 Debt PP&E $1,500 $1,600 Stockholders equity $2,910 $2,910 Total For 2525 the Companys asset turnover ratio (Sales2525 Total assets2525) is 3.6. Depreciation equals 12% of PP&E, and the gross profit margin (= Earnings Before Interest and Taxes Sales) is 8.30%. Interest expense equals 9.40% of Long Term Debt. Taxes equal 35% of taxable income, and the payout ratio (= Dividends Net income) is 60%. There are no other items on the income statement for 2525. There are 80 shares outstanding. As a prospective investor in the Companys shares, you are especially interested in their financial ratios. You know the price-to-earnings ratio at year-end 2525 equals 24.2. More significant to you, however, is the price-to-cash-flow ratio (= shareprice operating cash flow per share). What is the companys price-tocash-flow ratio? a. 11.9 b. 13.1 c. 15.8 d. 17.4 e. 14.4
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