Question

Market Value Ratios Val's Volleyball Supply's market-to-book ratio is currently 3.31 times and PE ratio is 5.51 times. If Val's Volleyball Supply's common stock is currently selling at $9.80 per share, what is the book value per share and earnings per share? (Round your answer to 2 decimal places.)

Answer 1

Answer:

Book Value per share is $2.96 and Earnings per share is $1.78

Explanation:

The market-to-book ratio is:

Market Value = 3.31 times

Book Value

The market value of the stock is $9.80 per share. Therefore, to calculate the Book Value, we make the Book Value subject and divide the ratio by Market Value per share:

Book Value per Share =  Market Value per share

                                           Market-to-Book ratio

                                     =  9.80

                                          3.31

                                     = $2.96

The PE ratio is:

   Price   = 5.51 times

Earnings

The price of the stock is $9.80 per share. Therefore, to calculate the Earnings per share, we make the Earnings subject and divide the PE ratio by Price of stock:

Earnings per share  =       Price  

                                     PE Ratio  

                               =  9.80

                                    5.51

                                = $1.78