An unlisted company has sales revenue of $456 million and 2 million common shares outstanding. Another company with similar characteristics, sales of $360 million and five million shares, trades on the Toronto Stock exchange for $12.50. Using the information from the question in an appropriate ratio, what is the share price of the unlisted company?

Question

Quizplus · Accepted Answer

The share price can be estimated using the Price-to-Sales (P/S) ratio. The listed company's P/S ratio is $12.50 / ($360 million / 5 million shares) = 0.1736. Applying this ratio to the unlisted company: 0.1736 * ($456 million / 2 million shares) = $39.58.

An Unlisted Company Has Sales Revenue of $456 Million and 2