ABC Company had addition to retained earnings for the current fiscal year just ended of $395,000. The firm paid out $195,000 in cash dividend, and it has ending total equity of $5.3 million. The company currently has 170,000 shares of common stock outstanding. Please answer the following questions: 1. What are earnings per share (E/PS)?
2. Dividends per share?
3. Book value of share?
4. If the stock currently sells for $64 per share, what is the market-to-book ratio?
5. The price to earnings ratio (P/E)?
6. The company had sales of $5.15 million, what is the price to sales ratio (P/S)?
7. Finally, explain the implication of P/E ratio for different types of investors.

ABC Company

1. E/PS = $3.47

2. Dividends per share = $1.15

3. Book value of share = $31.18

4. Market-to-book ratio = 2.05 : 1

5. Price to earnings ratio (P/E) = 18.44 times

6. Price to Sales ratio (P/S) = 2.11 times or 2.11 : 1

7. A high P/E ratio shows that a company's share is overvalued and vice versa.  This knowledge will equip the investor to take position.  Some investors are interested in the long-term growth of their investments.  Others are interested in the short-term.  With P/E ratio, an investor who is interested in the long-term growth can determine the market value and the future earnings growth.  For those interested in short-term, they can know when the price is rising to sell off their investment and maximize profit.

Explanation:

Addition to retained earnings = $395,000

Dividend paid out $195,000

Net income $590,000

Ending Equity = $5.3 million

Beginning Equity = $4,905,000 ($5,300,000 - 395,000)

Outstanding common stock shares = 170,000

2) Earnings per share (E/PS) = Earnings or Net Income/ No. of outstanding shares = $590,000/170,000 = $3.47

3) Dividends per share = Dividends paid/ No. of outstanding shares = $195,000/170,000 = $1.15

4) Book value of share = Ending Equity/No. of outstanding shares = $5,300,000/170,000 = $31.18

5) Market-to-book ratio = Market price/book value = $64/$31.18 = 2.05 : 1

6. Price to earnings ratio (P/E) = Market price/EPS = $64: $3.47 = 18.44 times

7. Price to Sales ratio (P/S) = Market Capitalization/Sales Revenue = ($64 x 170,000)/$5,150,000 = 2.11 : 1

8. Market capitalization = Market price of shares multiplied by number of outstanding shares.

i guess you could put raise the economic balance

answer; ///(d); determining who competes most closely   with whom evaluating whether industry driving forces and competitive pressure favor some strategic groups and hurt others, and ascertaining whether the profit potential of different strategic groups varies due to the strengths and weaknesses in each groups respective market positions;