Tartan Corporation has the following 10-year data: Number of common shares outstanding ....... 1,000,000 Average annual earnings
Question:
Number of common shares outstanding ....... 1,000,000
Average annual earnings ............. $2,635,000
Average market price of the common stock ....... $20/share
a. Securities analysts think Tartan will earn $5 million next year and have 1,200,000 common shares outstanding. What price do you expect for its common stock next year? Begin your answer by calculating a P/E ratio.
b. Calculate the market-to-book ratio using your answer to part (a) and assuming a book value of $10 a share.
c. If the price of Tartan’s stock is currently $30 a share, explain if you think it’s a good buy.
Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
a Current PE ratio 2026350001000000 202635 759 Futur...View the full answer
Answered By
Asim farooq
I have done MS finance and expertise in the field of Accounting, finance, cost accounting, security analysis and portfolio management and management, MS office is at my fingertips, I want my client to take advantage of my practical knowledge. I have been mentoring my client on a freelancer website from last two years, Currently I am working in Telecom company as a financial analyst and before that working as an accountant with Pepsi for one year. I also join a nonprofit organization as a finance assistant to my job duties are making payment to client after tax calculation, I have started my professional career from teaching I was teaching to a master's level student for two years in the evening.
My Expert Service
Financial accounting, Financial management, Cost accounting, Human resource management, Business communication and report writing. Financial accounting : • Journal entries • Financial statements including balance sheet, Profit & Loss account, Cash flow statement • Adjustment entries • Ratio analysis • Accounting concepts • Single entry accounting • Double entry accounting • Bills of exchange • Bank reconciliation statements Cost accounting : • Budgeting • Job order costing • Process costing • Cost of goods sold Financial management : • Capital budgeting • Net Present Value (NPV) • Internal Rate of Return (IRR) • Payback period • Discounted cash flows • Financial analysis • Capital assets pricing model • Simple interest, Compound interest & annuities
65+ Reviews
86+ Question Solved
Related Book For 
Personal Finance An Integrated Planning Approach
ISBN: 978-0136063032
8th edition
Authors: Ralph R Frasca
Question Posted:
