Refer to the financial statements of Byrd Inc. What is the firm\'s P/E ratio? A.
ID: 2729464 • Letter: R
Question
Refer to the financial statements of Byrd Inc. What is the firm's P/E ratio?
A. 15.0
B. 17.5
C. 20.0
D. 12.5
E. 10.0
The balance sheet and income statement shown
below are for Byrd Inc, and the
data are to be used for questions
31
through
49
. Note that the firm has no
amortization charges, it does not lease any assets, and none of its debt must
be retired during the
next 5 years (notes payable will be rolled over).
BALANCE SHEET
Cash
$ 140.0
Accounts payable
$ 800.0
Accts. receivable
880.0
Notes payable
600.0
Inventories
1,320.0
Accruals
400.0
Total current assets
$2,340.0
Total current liabilities
$1,800.0
Long
-
term bonds
1,000.0
Total debt
$2,800.0
Common stock (50,000 shares)
200.0
Retained earnings
1,000.0
Net plant & equip.
1,660.0
Total common equity
$1,200.0
Total assets
$4,000.0
Total liabilities & equity
$4,000.0
INCOME STATEMENT
Net sales
$ 6,000.0
Operating costs
5,599.8
Depreciation
100.2
EBIT
$ 300.0
Less: Interest
96.0
EBT
$ 204.0
Less: Taxes
81.6
Net income
$ 122.4
OTHER DATA
Shares outstanding (millions)
60.00
Common dividends
$42.8
Interest rate on N/P and long
-
term bonds
6.0%
Federal plus state income tax rate
40%
Year
-
end stock price
$30.60
Explanation / Answer
EPS = Net income/Number of shares outstanding
= $122,400,000/60,000,000
= $2.04
Stock price= Earnings per share×PE Ratio
$30.60= $2.04×PE Ratio
PE Ratio = 15