Reading 26, Question 16-21 question, totally, income, market, should

ramdabom

Got totally lost ah…
Several questions need help:
1. sale of AR to SPV, the AR should still be held on Balance Sheet, but why the exhibit 1 shows the B/S excluding the AR with no indications in texts?
2. question 19 - P/E ratio = market capitalization / net income?
3. question 21- from where can we see the estimate of PDQ’s solo value is “crude”??
thanks in advance!

sabaruch

1. It’s just the way they’ve done structured the question
3. the estimates aren’t shown, the purpose of the question is that you imagine you were to estimate the value based on the data given, and comment why it wouldn’t be very accurate. from the 3 possible answers it’s obviously going to be A
Not all questions want you to work with the set of numbers, some of them just want you to think about it.

ba736

I don’t have the book in front of me but with regard to question two, market capitalisation/net income is the same as Price/EPS.
Net income/No. of shares in issue = EPS
Market Capitalisation/No. of shares in issue = Price per share