Question
World Wide Web Wares(4W, forshort) is an online retailer of small kitchen appliances and utensils. The firm has been around for a few years and
World Wide Web Wares(4W, forshort) is an online retailer of small kitchen appliances and utensils. The firm has been around for a few years and has created a nice market niche for itself. Infact, it actually turned a profit lastyear, albeit a fairly small one. After doing some basic research on thecompany, you've decided to take a closer look. You plan to use theprice-to-sales ratio to value thestock, and you have collectedP/S multiples on the following Internet retailerstocks.
Company P/S Multiples
Amazing.com 4.7
ReallyCooking.com 4.3
Fixtures& Appliances Online 3.9
Find the averageP/S ratio for these three firms. Given that 4W is expected to generate $49 million in sales next year and will have 15 million shares of stockoutstanding, use the averageP/S ratio you computed above to put a value on4W's stock.
The average p/s ratio is 4.3
The value of4W's stock is $__________________________. (Round to the nearestcent.)
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