Smolira Golf has 12,000 shares of common stock outstanding, and the market price for a share of stock at the end of 2014 was $75. What is the price-earnings ratio? (Do not round intermediate calculations.Round your answer to 2 decimal places (e.g., 32.16).) What is the price-sales ratio? (Do not round intermediate calculations.Round your answer to 2 decimal places (e.g., 32.16).) What are the dividends per share? (Do not round intermediate calculations.Round your answer to 2 decimal places (e.g., 32.16).) What is the market-to-book ratio at the end of 2014? (Do not round intermediate calculations.Round your answer to 2 decimal places (e.g., 32.16).)Some recent financial statements for Smolira Golf, Inc., follow. Solution Requirement 1: Price-earnings ratio = $75 / ($35,207 / 12,000) = 25.56 times Requirement 2: Price-sales ratio = $75 * 12,000 / $186,970 = 4.81 times Requirement 3: Dividends per share = $11,885 / 12,000 = $0.99 Requirement 4: Market-to-book ratio = $75 / ($75,966 / 12,000) = 11.85 times.

1. SMOLIRA GOLF, INC.
Balance Sheets as of December 31, 2013 and 2014
2013
2014
2013
2014
Assets
Liabilities and Owners’ Equity
Current assets
Current liabilities
Cash
$
2,911
$
2,807
Accounts payable
$
2,203
$
2,700
Accounts receivable
4,717
5,681
Notes payable
1,800
2,216
Inventory
12,678
13,682
Other
100
117
Total
$
20,306

2. $
22,170
Total
$
4,103
$
5,033
Long-term debt
$
14,300
$
17,060
Owners’ equity
Common stock
and paid-in surplus
$
43,000
$
43,000
Fixed assets
Accumulated retained earnings
15,704
39,842
Net plant and equipment
$
56,801
$
82,765
Total
$
58,704
$
82,842
Total assets
$
77,107

3. $
104,935
Total liabilities and owners’ equity
$
77,107
$
104,935
SMOLIRA GOLF, INC.
2014 Income Statement
Sales
$
189,370
Cost of goods sold
127,203
Depreciation
5,233
EBIT
$
56,934
Interest paid
1,330
Taxable income
$
55,604
Taxes
19,461
Net income
$
36,143
Dividends
$
12,005
Retained earnings

4. 24,138
Smolira Golf has 12,000 shares of common stock outstanding, and the market price for a share of
stock at the end of 2014 was $87.
Requirement 1:
What is the price-earnings ratio? (Do not round intermediate calculations.Round your answer to
2 decimal places (e.g., 32.16).)
Price-earnings ratio
times
Requirement 2:
What is the price-sales ratio? (Do not round intermediate calculations.Round your answer to 2
decimal places (e.g., 32.16).)
Price-sales ratio
times
Requirement 3:
What are the dividends per share? (Do not round intermediate calculations.Round your answer to
2 decimal places (e.g., 32.16).)
Dividends per share
$
Requirement 4:
What is the market-to-book ratio at the end of 2014? (Do not round intermediate
calculations.Round your answer to 2 decimal places (e.g., 32.16).)
Market-to-book ratio
times
SMOLIRA GOLF, INC.
Balance Sheets as of December 31, 2013 and 2014
2013
2014
2013
2014
Assets
Liabilities and Owners’ Equity
Current assets
Current liabilities
Cash
$

5. 2,911
$
2,807
Accounts payable
$
2,203
$
2,700
Accounts receivable
4,717
5,681
Notes payable
1,800
2,216
Inventory
12,678
13,682
Other
100
117
Total
$
20,306
$
22,170
Total
$
4,103
$
5,033
Long-term debt
$
14,300
$
17,060
Owners’ equity

6. Common stock
and paid-in surplus
$
43,000
$
43,000
Fixed assets
Accumulated retained earnings
15,704
39,842
Net plant and equipment
$
56,801
$
82,765
Total
$
58,704
$
82,842
Total assets
$
77,107
$
104,935
Total liabilities and owners’ equity
$
77,107
$
104,935
Solution
A) Earning per share = 36143 / 12000 = 3.01
Price Eraning ratio = 87/ 3.01 = 28.90 Times
B) Price to sales ratio = Market capitalization / Sales

7. = 12000 * 87 / 189370 = 5.51 Times
C) Dividend Per share = Dividend paid / No of shares
= 12005 / 12000 = $ 1.00
D) Market to book ratio = Market Capitalization / Book value of equity
Book value of equity = Common stock + retained earnings = 82842
Market capitalization = 87 * 12000 = 1044000
Market to book ratio = 1044000 / 82842 = 12.60