katios are mostly calculated using data drawn from the financlal statements of a firm. However, another group of ratios, called marker value atios, relate to a firm's observable market value, stock prices, and book values, integrating information from both the market and the firm's financial tatements. Consider the case of Blue Hamster Manufacturing Inc: Blue Hamster Manufacturing Inc. Just reported earnings after tax (also called net income) of $8,000,000 and a current stock price of $17.50 per share. The company is forecasting an increase of 25% for its after-tax income next year, but it also expects it will have to issue 1,500,000 new shares of stock (raising its shares outstanding from 5,500,000 to 7,000,000). If Blue Hamster's forecast turns out to be correct and its price/earnings (P/E) ratio does not change, what does the company's management expect its stock price to be one year from now? (Round any P/E ratio calculation to four decimal places.) $17.26 per share $17.50 per share $12.95 per share $21.58 per share One year tater, Blue Hamster's shares are trading at 552.09 per share, and the company reports the value of its total common equity as $24,164,000. Given this information, Blue Mamster's market-to-book (M/B) fatio is Can a company's shares exhibit a negative P/E ratio? Yes Wo Which of the following statements is true about market value raties? Companies with High research and development (RsD) expenses tend to have high P/ E ratios Companies with bigh research and developinent (RAD) expenses tend to have low P/E ratios