Let's solve each part step by step as per the data in the image. ### Given Data (from the image): #### SMOLIRA GOLF CORPORATION **2024 Income Statement** | Item | Amount ($) | |-------------------------------------------|-------------| | Sales | 586,454 | | Cost of goods sold | 369,788 | | Depreciation | 48,125 | | Earnings before interest and taxes (EBIT) | 168,541 | | Interest paid | 21,496 | | Taxable income | 147,045 | | Taxes | 49,995 | | Net income | 97,050 | | Dividends | 37,900 | | Retained earnings | 59,150 | - **Shares Outstanding:** 44,000 - **Market Price per Share (end of 2024):** $27.80 --- ## **a. What is the price earnings ratio?** **Step 1: Calculate Earnings Per Share (EPS)** \[ \text{EPS} = \frac{\text{Net Income}}{\text{Shares Outstanding}} = \frac{97,050}{44,000} = 2.2057 \] **Step 2: Calculate P/E Ratio** \[ \text{P/E Ratio} = \frac{\text{Market Price per Share}}{\text{Earnings Per Share}} = \frac{27.80}{2.2057} = 12.61 \] **Final Answer (rounded to 2 decimals):** \[ \boxed{12.61} \] --- ## **b. What are the dividends per share?** \[ \text{Dividends per Share} = \frac{\text{Dividends}}{\text{Shares Outstanding}} = \frac{37,900}{44,000} = 0.8614 \] **Final Answer (rounded to 2 decimals):** \[ \boxed{0.86} \] --- ## **c. What is the market-to-book ratio at the end of 2024?** **Step 1: Find Book Value per Share** \[ \text{Book Value per Share} = \frac{\text{Total Equity}}{\text{Shares Outstanding}} \] But we are only given retained earnings for this year, not total equity. Assuming that the book value per share here is using the end-of-year retained earnings (common in some problems): \[ \text{Book Value per Share} = \frac{59,150}{44,000} = 1.3443 \] **Step 2: Market-to-book ratio** \[ \text{Market-to-Book Ratio} = \frac{\text{Market Price per Share}}{\text{Book Value per Share}} = \frac{27.80}{1.3443} = 20.68 \] **Final Answer (rounded to 2 decimals):** \[ \boxed{20.68} \] --- # **Summary Table** | a. Price earnings ratio | **12.61** | |---------------------------------|-----------| | b. Dividends per share | **0.86** | | c. Market-to-book ratio | **20.68** | --- **Note:** If you have a different value for equity (other than retained earnings), substitute that in the book value per share formula. The usual approach is to use total equity, but with only retained earnings given, that is what is used. Let me know if you need the solution for part d (PEG ratio) or have more details about equity!

Let's carefully interpret and solve each part step-by-step based on the provided data. --- ### Given Data Summary: **Income Statement (2024):** | Item | Amount ($) | |-----------------------------------------|--------------| | Sales | 586,454 | | Cost of goods sold | 369,788 | | Depreciation | 48,125 | | EBIT (Earnings Before Interest & Taxes) | 168,541 | | Interest paid | 21,496 | | Taxable income | 147,045 | | Taxes | 49,995 | | Net income | 97,050 | | Dividends | 37,900 | | Retained earnings | 59,150 | - **Shares outstanding:** 44,000 - **Market price per share (end of 2024):** $27.80 --- ### **a) Price Earnings (P/E) Ratio** **Step 1: Calculate Earnings Per Share (EPS):** \[ \text{EPS} = \frac{\text{Net Income}}{\text{Shares Outstanding}} = \frac{97,050}{44,000} \approx 2.2057 \] **Step 2: Calculate P/E Ratio:** \[ \text{P/E} = \frac{\text{Market Price per Share}}{\text{EPS}} = \frac{27.80}{2.2057} \approx 12.61 \] **Final answer:** \[ \boxed{12.61} \] --- ### **b) Dividends per Share** \[ \text{Dividends per Share} = \frac{\text{Dividends}}{\text{Shares Outstanding}} = \frac{37,900}{44,000} \approx 0.8602 \] **Rounded to 2 decimal places:** \[ \boxed{0.86} \] --- ### **c) Market-to-Book Ratio** **Step 1: Determine Book Value per Share** Typically, Book Value per Share = Total Equity / Shares Outstanding. However, the total equity isn't explicitly given, but we can approximate using retained earnings and assuming the book value is based on the end-of-year retained earnings. **Note:** Since the problem only provides retained earnings, the most straightforward estimate of book value per share is: \[ \text{Book value per share} = \frac{\text{Retained earnings}}{\text{Shares outstanding}} = \frac{59,150}{44,000} \approx 1.3443 \] **Step 2: Calculate Market-to-Book Ratio:** \[ \text{Market-to-Book} = \frac{\text{Market Price}}{\text{Book Value per Share}} = \frac{27.80}{1.3443} \approx 20.68 \] **Final answer:** \[ \boxed{20.68} \] --- ### **Summary:** | Part | Result | |--------|------------| | a) P/E Ratio | **12.61** | | b) Dividends per Share | **0.86** | | c) Market-to-Book Ratio | **20.68** | --- ### **Additional Notes:** - If total equity were provided, we could refine the book value per share further. - The calculations are based on the data given and standard financial formulas. Let me know if you'd like assistance with other parts or clarifications!

Let's proceed with part (d) step-by-step, using the data provided. --- ### **d) What is the PEG ratio?** **Definition:** The Price/Earnings to Growth (PEG) ratio is calculated as: \[ \text{PEG Ratio} = \frac{\text{P/E Ratio}}{\text{Earnings Growth Rate (\%)}} \] **Step 1: Find the P/E ratio (already calculated in part a):** \[ \text{P/E} = 12.61 \] **Step 2: Determine the earnings growth rate.** Since only one year's data is provided, typically, the PEG ratio uses the expected or historical earnings growth rate. **Assumption:** If no growth data is provided, a common approach is to assume a growth rate based on available information or use the company's recent growth rate. **Given Data:** No explicit growth rate is provided. **However,** the problem states: > "What is the PEG ratio?" If the problem assumes that the earnings are expected to grow at a certain rate, or if previous year's net income is known, we could estimate growth. **But** since no prior data is available, and considering the problem context, **the typical approach** is to use the company's earnings growth rate estimated from the data. --- ### **Estimating Earnings Growth Rate:** Suppose the net income last year was significantly different; but since no past data is given, perhaps the problem expects us to assume a zero growth rate (i.e., no growth), which would make the PEG ratio infinite or undefined. Alternatively, **if the problem expects a calculation** based on the "Net income" and "Retained earnings," perhaps the growth rate can be approximated from retained earnings or other data. --- ### **Alternative approach:** **Estimate growth rate from retained earnings:** If we assume that the retained earnings have grown from a previous amount, but we lack that info, perhaps the problem expects us to use the company's **dividend payout ratio** or other data. --- ### **Conclusion:** Given the data limitations, **the most common approach** in such exam problems is: - **Assuming the earnings growth rate is 10%** (or another typical value), or - **If the problem's original data or instructions** specify a growth rate, use that. --- ### **Possible answer:** **If the problem expects you to compute the PEG ratio assuming the earnings growth rate is 10%,** \[ \text{PEG} = \frac{12.61}{10} = 1.26 \] **Final answer:** \[ \boxed{1.26} \] --- ### **Summary:** | Part | Result | |---------|-------------------| | d) PEG Ratio | **1.26** (assuming 10% growth rate) | --- **Note:** If the problem provides a specific growth rate, replace 10% with that value. Otherwise, it’s common in such problems to assume a typical growth rate (e.g., 10%). --- **In conclusion,** the **PEG ratio** at an assumed **10% earnings growth rate** is approximately **1.26**. --- Let me know if you'd like me to clarify further or assist with other parts!

Certainly! Let's carefully re-express and verify all parts step-by-step with clear explanations. I'll use the data from the image you provided and ensure each calculation is correct and logical. --- ## **Given Data (from the income statement):** | Item | Amount ($) | |-----------------------------------------|--------------| | Sales | 586,454 | | Cost of goods sold | 369,788 | | Depreciation | 48,125 | | EBIT (Earnings Before Interest & Taxes) | 168,541 | | Interest paid | 21,496 | | Taxable income | 147,045 | | Taxes | 49,995 | | Net income | 97,050 | | Dividends | 37,900 | | Retained earnings | 59,150 | - **Number of shares outstanding:** 44,000 - **Market price per share (end of 2024):** $27.80 --- ## **Part a: What is the Price-Earnings (P/E) Ratio?** ### Step 1: Calculate Earnings Per Share (EPS) \[ \text{EPS} = \frac{\text{Net Income}}{\text{Shares Outstanding}} = \frac{97,050}{44,000} \] Calculating: \[ 97,050 \div 44,000 \approx 2.2057 \] ### Step 2: Calculate P/E ratio \[ \text{P/E} = \frac{\text{Market Price per Share}}{\text{EPS}} = \frac{27.80}{2.2057} \approx 12.61 \] **Answer:** \[ \boxed{12.61} \] --- ## **Part b: What are the dividends per share?** \[ \text{Dividends per share} = \frac{\text{Dividends}}{\text{Shares Outstanding}} = \frac{37,900}{44,000} \] Calculating: \[ 37,900 \div 44,000 \approx 0.8602 \] **Rounded to 2 decimal places:** \[ \boxed{0.86} \] --- ## **Part c: What is the market-to-book ratio at the end of 2024?** **Step 1: Find Book Value per Share** Typically, Book Value per Share = Total Equity / Shares Outstanding. **However, the total equity is not directly given.** **But** the problem only provides "Retained earnings," which is part of total equity. Since no other equity data (like common stock, additional paid-in capital, etc.) is provided, **we'll assume** the book value per share is approximated by retained earnings per share. \[ \text{Book value per share} = \frac{\text{Retained earnings}}{\text{Shares Outstanding}} = \frac{59,150}{44,000} \approx 1.3443 \] **Step 2: Calculate Market-to-Book Ratio** \[ \text{Market-to-Book Ratio} = \frac{\text{Market Price per Share}}{\text{Book Value per Share}} = \frac{27.80}{1.3443} \approx 20.68 \] **Answer:** \[ \boxed{20.68} \] --- ## **Part d: What is the PEG ratio?** ### Step 1: Recall the formula: \[ \text{PEG Ratio} = \frac{\text{P/E Ratio}}{\text{Earnings Growth Rate (\%)}} \] **Note:** The growth rate must be provided or estimated. Since no growth rate is given, **common practice** is to assume a typical growth rate, say **10%** (or 0.10). ### Step 2: Calculate PEG ratio assuming 10% growth: \[ \text{PEG} = \frac{12.61}{10} = 1.261 \] **Final answer:** \[ \boxed{1.26} \] *(rounded to two decimals)* --- ## **Summary of all parts:** | Part | Answer | Explanation | |--------|-------------------------|------------------------------------------------------------| | a) P/E Ratio | **12.61** | Net income divided by shares, then market price divided by EPS | | b) Dividends per share | **0.86** | Dividends divided by shares outstanding | | c) Market-to-Book Ratio | **20.68** | Market price divided by book value per share | | d) PEG Ratio | **1.26** (assuming 10% growth) | P/E ratio divided by assumed earnings growth rate | --- ## **Final notes:** - The calculation of **book value per share** is simplified here as using **retained earnings only**, which is common in such problems when full equity info isn't provided. - The **PEG ratio** depends on the assumed growth rate; if you have a specific growth rate, substitute it into the formula. --- Let me know if you'd like further clarification or if there's any specific part you'd like to revisit!