Market value measures are earnings per share, price earnings ratio, price sales ratio and market to book ratio.

Earnings per share = Net income / Shares outstanding.

Say for example, number of outstanding shares is 30 million shares and net income is $600 million. Then earnings per share would equal $20 meaning every share earned 20 dollars.

Price-earnings ratio = Price per share / Earnings per share.

If the earnings per share are $20, and the price per share is $80, then price-earnings ratio is 4. This ratio shows us how much investors are willing to pay for every dollar of current earnings. A high PE ratio is desirable and may be considered as the firm having high future growth prospects; however a negative PE ratio can be as a result negative earnings or no profit for the current period.

Price-sales ratio = Price per share / Sales per share.

Say, price per share is $80, and sales per share is $94, then the PS ratio is 0.85. A low PS ratio is considered as good sign for investors.

Market-to-book ratio = Market value per share / Book value per share.

Market-to-book ratio compares the market value of the firms investments to their cost. If the market per share is $80 and book value per share $72, then market-to-book ratio is 1.11. If the value is more than 1, then we can infer that the firm created 11% additional value for its investors.

Calculate the market value measures for the Prufrock Corporation using the tables referred to in question 2 of this discussion assignment and provide an interpretation for each.

Please show steps. Thank you.

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