标题: Reading 59: Introduction to Price Multiples LOSb习题精选 [打印本页]
作者: honeycfa 时间: 2010-4-23 11:11 标题: [2010]Session 14-Reading 59: Introduction to Price Multiples LOSb习题精选
LOS b: Calculate and interpret P/E, P/BV, P/S, and P/CF.
Which of the following statements regarding the value of the firm is most accurate?
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A) |
A company's legal and treasury departments act to reduce the tax rate from 37.5% to 37.0%, the value of the firm will increase. | |
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B) |
The board of directors increases the dividend payout ratio, the value of the company will increase. | |
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C) |
The government engages in a restrictive monetary policy and the expected inflation rate decreases, the P/E ratio will decrease. | |
A decrease in the tax rate would increase the company’s EPS and thus would increase the value of the firm. (The equation for EPS includes the term (1 ? t).)
The other statements are incorrect.
Increase in dividend payout/reduction in earnings retention. In this case, an increase in the dividend payout will likely decrease the P/E ratio because a decrease in earnings retention will likely lower the P/E ratio. The logic is as follows: Because earnings retention impacts both the numerator (dividend payout) and denominator (g) of the P/E ratio, the impact of a change in earnings retention depends upon the relationship of ke and ROE. If the company is earning a higher rate on new projects than the rate required by the market (ROE > ke), investors will likely prefer that the company retain more earnings. Since an increase in the dividend payout would decrease earnings retention, the P/E ratio would fall, as investors will value the company lower if it retains a lower percentage of earnings.
Decrease in the expected inflation rate and decrease in the required rate of return. The expected inflation rate is a component of ke (through the nominal risk-free rate). ke can be represented by the following: nominal risk-free rate + stock risk premium, where nominal risk-free rate = [(1 + real risk-free rate) × (1 + expected inflation rate)] – 1.
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If the rate of inflation decreases, the nominal risk-free rate will decrease.
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ke will decrease.
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The spread between ke and g, or the P/E denominator, will decrease.
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P/E ratio will increase.
作者: honeycfa 时间: 2010-4-23 11:12
An increase in a firm’s stock price will, all else equal, cause the price to cash flow (P/CF) ratio to:
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A) |
there is insufficient information to tell. | |
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An increase in a firm’s stock price will, everything else being equal (i.e., the CF does not change), cause the P/CF ratio to increase.
作者: honeycfa 时间: 2010-4-23 11:12
Given the following information, compute the price/cash flow ratio for EAV Technology.
- Net income per share = $6
- Price per share = $100
- Depreciation per share = $2
- Interest expense per share = $4
- Marginal tax rate = 25%
Cash Flow = Net income per share + Depreciation per share = $6 + $2 = $8
Price/cash flow = $100 / $8.0X = 12.5X
作者: honeycfa 时间: 2010-4-23 11:13
Which of the following accounting variables is least likely to be manipulated?
Sales is the accounting variable considered least likely to be manipulated.
作者: honeycfa 时间: 2010-4-23 11:13
One advantage to using the price/book value (P/B) ratio over using the price/earnings (P/E) ratio is that P/B can be used when:
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A) |
stock markets are volatile. | |
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B) |
earnings or cash flows are negative. | |
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C) |
the firm is in a slow growth phase. | |
When earnings are negative, P/E ratios cannot be used but P/B ratios can be used. The firm's rate of growth and the volatility of markets do not suggest advantages of using P/B ratios rather than P/E ratios.
作者: honeycfa 时间: 2010-4-23 11:14
The price to book value ratio (P/BV) is a helpful valuation technique when examining firms:
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A) |
with older assets compared to those with newer assets. | |
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B) |
that hold primarily liquid assets. | |
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C) |
with the same stock prices. | |
P/BV analysis works best for firms that hold primarily liquid assets.
作者: honeycfa 时间: 2010-4-23 11:14
The current price of XYZ, Inc., is $40 per share with 1,000 shares of equity outstanding. Sales are $4,000 and the book value of the firm is $10,000. What is the price/sales ratio of XYZ, Inc.?
The price/sales ratio is (price per share)/(sales per share) = (40)/(4,000/1,000) = 10.0. Alternatively, the price/sales ratio may be thought of as the market value of the company divided by its sales, or (40 × 1,000)/4,000, or 10.0 again.
作者: honeycfa 时间: 2010-4-23 11:14
Given the following information, compute price/book value.
- Book value of assets = $550,000
- Total sales = $200,000
- Net income = $20,000
- Dividend payout ratio = 30%
- Operating cash flow = $40,000
- Price per share = $100
- Shares outstanding = 1000
- Book value of liabilities = $500,000
Book value of equity = $550,000 - $500,000 = $50,000
Market value of equity = ($100)(1000) = $100,000
Price/Book = $100,000/$50,000 = 2.0X
作者: honeycfa 时间: 2010-4-23 11:14
Given the following information, compute price/sales.
- Book value of assets = $550,000.
- Total sales = $200,000.
- Net income = $20,000.
- Dividend payout ratio = 30%.
- Operating cash flow = $40,000.
- Price per share = $100.
- Shares outstanding = 1,000.
- Book value of liabilities = $500,000.
Market value of equity = ($100)(1000) = $100,000
Price / Sales = $100,000 / $200,000 = 0.5X
作者: honeycfa 时间: 2010-4-23 11:15
General, Inc., has net income of $650,000 and one million shares outstanding. The profit margin is 6 percent and General, Inc., is selling for $30.00. The price/sales ratio is equal to:
6% profit margin = $650,000/x; x (sales) = $10,833,333.
Sales per share = $10.83 M/1,000,000 = $10.83 per share.
P/Sales = $30.00/$10.83 = 2.77.
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