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Please answer will give thumbs up! Ratios are mostly calculated using data drawn from the financial statements of a firm. However, another group of ration,
Please answer will give thumbs up!
Ratios are mostly calculated using data drawn from the financial statements of a firm. However, another group of ration, called market value based ratios, relate to a firm's observable market value, stock prices, and book values, integrating Information from both the market and the firm's financial statements. Cold Goose Metal Works Inc. just reported earnings after tax (also called net income) of $8,000,000, and a current stock price of $14.75 per share. The company is forecasting an increase of 25% for its after-tax income next year, but it also expects it will have to issue 1,500,000 new shares of stock (raising its shares outstanding from 5,500,000 to 7,000,000). If Cold Goose's forecast turns out to be correct and its price/earnins (P/E) ratio does not change, what does the company's management expect its stock price to be one year from now? (Note: Round any P/E ratio calculation to four decimal places and expected EPS to two decimal places.) O $14.55 per share O $14.75 per share O $10.91 per share $18.19 per share One year later, Cold Goose's shares are trading at $47.12 per share, and the company reports the value of its total common equity as $20,370,000 Given this information, Cold Goose's market/book (M/B) ratio is (Note: Do not round intermediate calculations.) Can a company's shares exhibit a negative P/E ratio? Yes ONO Which of the following statements is true about market value ratios? Companies with high research and development (R&D) expenses, and thus strong growth potential, tend to have low P/E ratios O Companies with high research and development (R&D) expenses, and thus strong growth potential, tend to have high P/E ratios Step by Step Solution
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