Ask Question
BusinessBusiness
17 September, 16:22

balance sheet showed total assets of $60 million, total liabilities (including preferred stock) of $45 million, and 1,000,000 shares of common stock outstanding. Next year, Flintstone is projecting that it will have net income of $1.5 million. If the average P/E multiple in Flintstone's industry is 15, what should be the price of Flintstone's stock

+5
Answers (1)
  1. 17 September, 19:55
    0
    The price per share should be $22.5

    Explanation:

    The price earnings multiple or P/E tells us how much price the investors are willing to pay for $1 earnings of the company.

    We first need to calculate the earnings per share of the company.

    Earnings per share = Net Income / Number of outstanding common shares

    Earnings per share = 1500000 / 1000000 = $1.5 per share

    Using the P/E for the industry, the price per share of Flintstone should be,

    P/E = Price per share / Earnings per share

    15 = Price per share / 1.5

    15 * 1.5 = Price per share

    Price per Share = $22.5
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “balance sheet showed total assets of $60 million, total liabilities (including preferred stock) of $45 million, and 1,000,000 shares of ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
Tuity Fruity Beverage Company's operating activities for the year are listed below. Purchases $140,600 Operating expenses 80,900 Beginning inventory 12,600 Ending inventory 18,600 Sales revenue 300,300 What is the cost of goods sold for the year? A.
Answers (2)
Which term describes the practice of identifying works published on the internet as a source in your writings?
Answers (1)
E. e. schattschneider believed that the sometimes narrow focus of interest groups is
Answers (1)
Mr. and Mrs. Mitchell, the owners of a small secondhand store, attended an auction where they bought a used safe for $50. The safe, part of the Sumstad estate, had a locked compartment inside, a fact the auctioneer mentioned.
Answers (1)
Intellectual property A. increases total surplus. B. eliminates the free rider problem. C. assigns property rights to knowledge. D. prevents people who do not own the knowledge from using it.
Answers (1)
New Questions in Business
At an auction, Ben bids on a 1957 Chevy coupe, believing that it is worth more than the price asked. When the car proves to need more repairs than Ben estimated, and thus is worth less as is, Ben is:
Answers (1)
uppose that an MBA degree creates no extemality because the benefits of an MBA are internalized by the student in the form of higher wages. If there are no government subsidies for MBAs, then which of the following statements is correct? a.
Answers (1)
The result of market research are used to identify the for a product
Answers (1)
Which segment of the African American market identified by Yankelovich is middle age, female, has the lowest income, feels "Black slang" should be avoided, and strongly supports "Buying Black?"
Answers (1)
Jean is trying to gauge the popularity of a proposal to change the city's one-way street to two - way streets. She polls 650 randomly selected individuals from the area to determine if they are in favor of the project.
Answers (1)
Home » Business » balance sheet showed total assets of $60 million, total liabilities (including preferred stock) of $45 million, and 1,000,000 shares of common stock outstanding. Next year, Flintstone is projecting that it will have net income of $1.5 million.
Sign Up Forgot Password?