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Rotios are mostly calculated using data drawn from the financial statements of a firm. However, another group of ratios, called market-based ratios, reiate to a

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Rotios are mostly calculated using data drawn from the financial statements of a firm. However, another group of ratios, called market-based ratios, reiate to a firm's observable market value, stock prices, and book values, integrating information from both the market and the firm's financial statements. Consider the case of Green Caterpillar Garden Supplies Inc.t Green Caterpaliar Garden Supplies Inc. Just reported earnings after tax (aiso called net income) of $8,500,000, and a current stock price of $34.00 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 2,000,000 new shares of stock (raising its shares outstanding from 5,500,000 to 7,500,000 ). If Green Caterpillar's forecast turns out to bo correct and its price-to-earnings (P/E) ratio does not change, what does the company's management expect its sthek price to be one year from now? (Noter Round intermediate calculations to four decimal places, Round the expected stock price to two decimal places.) \$31.17 per share $34 per share $23.38 per share 438.96 per share One year Iater, Green Caterplliar's shares are trading at $48.36 per share, and the company reports the value of its total common equity as $46,755,000, Given this intormation, Green Caterpiliar's market-to-book (M/8) ratio is (Note: Do not round intermediate calculations.) One year later, Green Caterpillar's shares are trading at $48.36 per share, and the company reports the value of its total common equity as $46,755,000. Given this information, Green Caterpillar's market-to-book (M/B) ratio is - (Note: Do not round intermediate calculations.) Can a company'stshares exhibit a negative P/E ratio? Yes No Which of the following statements is true about market value ratios? Companies with high research and development (RsD) expenses tend to have low P/E ratios. Companies with high research and development (RaD) expenses tend to have high P/E ratios

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