Ratios are mostly calculated using data drawn from the financial statements of a firm. However, another group of ratios, called market value 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 Chapter 4 Assignment statements. Consider the case of Green Caterpillar Garden Supplies Inc.: Green Caterpillar Garden Supplies Inc. just reported earnings after tax (also called net income) of $0,250,000 and a current stock price of $12.00 share. The company is forecasting an increase of 25% for its after-tax income net year, but it also expects t will have to 000 new shares of stock (raising its shares outstanding from 5,500,000 to 8,500,000) Caterpllar'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.) $9.71 per share ( $12.00 per share ( $7.28 per share $12.14 per share One year later, Green Caterpillar's shares are trading at $55.80 per share, and the company reports the value of its total common equity as 16,507,000. Given this information, Green Caterpillar's market-to-book (M/B) ratio is Can a company's shares exhibit a negative P/E ratio? O NO Yes which of the following statements is true about market value ratios? Companies with high research and development (R&D) expenses tend to have high P/E ratios. Companies with High research and development (R&D) expenses tend to have low P/E ratios. Type here to search