Market Value Ratios Bree's Tennis Supply's market-to-book ratio is currently 9.4 times and PE ratio is 20 times.If Bree's Tennis Supply's common stock is currently selling at $20.50 per share,what is the book value per share and earnings per share?

Question

Quizplus · Accepted Answer

To find the book value per share, we can divide the market-to-book ratio by the PE ratio:
Book value per share = Market-to-book ratio / PE ratio
Book value per share = 9.4 / 20
Book value per share = 0.47
To find the earnings per share, we can divide the stock price by the PE ratio:
Earnings per share = Stock price / PE ratio
Earnings per share = $20.50 / 20
Earnings per share = $1.025
Therefore, the correct answer is B, with a book value per share of $0.47 and earnings per share of $1.025.

Market Value Ratios Bree's Tennis Supply's Market-To-Book Ratio Is Currently