Little Book LTD has total assets of $860 000. There are 75 000 shares of stock outstanding, total book value of $750 000 with a market value of $12 a share. The firm has a profit margin of 6.5% and a total asset turnover of 1.5.

a) Calculate the company’s EPS?

b) What is the market –to- book ratio?

a) Little book LTD earning per share is $1.118 per share.  

Explanation:

To calculate earning per share we will use following formula:

Now to find net income we will take help of  asset turnover ratio :

NOTE :  LET x BE THE NET SALES DURING THE YEAR.

Asset turnover ratio =

1.5 × $860000 = x

x (net sales) = $1290000

Outstanding shares = 75000 shares

So Net Income  = $1290000×.065

                         = $83850

Now Earning per share =

 Earning per share = $1.118

b)  Market to Book Ratio will be 1.2 for Little Book LTD.

Explanation:

Market to Book Ratio =

Market Capitalization = $ 75000× $ 12

                                   = $900000

So, Market To Book Ratio = =  1.2

    So , Market To Book Ratio is 1.2  for little book ltd.          

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