Ask Question
16 November, 08:22

Delta cabinets has 13,000 shares of stock outstanding at a market price of $19 a share. the earnings per share are $1.34. the firm has current assets of $49,000, net fixed assets of $220,000, and total liabilities of $187,000. today, the firm is paying a cash dividend of $.40 a share. ignore taxes. after the dividend, the firm's:

+1
Answers (1)
  1. 16 November, 08:40
    0
    After the dividend, the firm's:

    a. book value per share will be $6.31.

    b. price-earnings ratio will be 13.88.

    c. shareholder value per share will be $18.60.

    d. stock price will be $19.00.

    e. earnings per share will be $.94.

    The answer is : b

    We calculate the ex-dividend price of a share on the day dividend is paid as follows:

    Ex-dividend Price = Share price before dividend - dividend paid per share

    Ex-dividend price = $18.6 ($19 - $0.40)

    We can use this ex-dividend price to calculate the company's P/E ratio after dividend.

    P/E = $18.6/$1.34 = 13.88059
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Delta cabinets has 13,000 shares of stock outstanding at a market price of $19 a share. the earnings per share are $1.34. the firm has ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers