Market Based Ratios (Answer All!)

1. select price 2. 10.50, 1.24, 7.00, or 16.80 3. Yes or No 4. Which of the Statement is true about Market Value ratios?

4. Market based ratios Aa Aa Ratios are mostly calculated based on the financial statements of a firm. However, another group of ratios, called market-based ratios, relate to a firm's observable market value, stock prices, and book values, integrating information from both the market and the firm's financial statements. Consider the case of Niagular Corp.: Niagular Corp. just reported a earnings after tax of $9,250,000, and its current stock price is $20.25 per share. Nagu lar Corp. is forecasting an increase of 25% for its earnings after tax next year, but it also expects it will have to issue 3,000,000 new shares of stock (raising its shares outstanding from 5,500,000 to 8,500,000). If Niagular Corp.'s forecast turns out to be correct and its price-to-earnings (P/E) ratio does not change, what does Niagular Corp. expect its stock price to be one year from now? O $16.39 O $20.25 O $12.29 O $20.49 One year later,Niagular Corp.'s stock is trading at $22.95, and the company reports its common equity value as $27,863,000. Niagular Corp.'s market price-to-book value (P/BV) ratio is Is it possible for a company to have a negative EPS and thus a negative P/E ratio? Which of the following statements is true about market value ratios? O Low P/E ratios could mean that the company has a great deal of uncertainty in its future earnings. o High P/E ratios could mean that the company has a great deal of uncertainty in its future earnings