Exam 6: Stock Valuation

SK Enterprises has total assets of $421,800,outstanding debt of $129,000,cash of $18,700,sales of $387,400,costs of $241,900,and depreciation of $31,200.The firm has 11,300 shares of stock priced at $34.40 a share.What is the firm's EV to EBITDA ratio?

A stock quote shows a last price of 32.13,a P/E of 17,and a net change of −.23.Based on this information,which one of the following statements is correct?

Webster preferred stock pays an annual dividend of $6.20 a share.What is the maximum price you should pay today to purchase this stock if you desire a rate of return of 14.25 percent?

Primary Colors has a debt-equity ratio of 0.56,a return on assets of 8.2 percent,and a dividend payout ratio of 45 percent.What is the firm's rate of growth?

What is the primary role of a designated market maker (DMM)?

Theo owns 49,800 of the 120,000 outstanding shares of BBE Inc.The share price is $28.64.Each share is granted one vote for each open seat on the board of directors.Currently,there are three open seats.Theo wants to be on the board and is assuming that no one,other than himself,will vote for him.How much additional money,if any,must he invest in BBE to guarantee his election if the firm uses a straight voting system?

Poplar Trees Inc.has 48,300 shares of stock outstanding,and each share receives one vote for each open seat on the board of directors.There are five open seats at this time.How many shares must you control if the firm uses straight voting to guarantee your personal election to the board?

Which one of these formulas is used to estimate a firm's growth rate?

According to finance professionals,which one of these factors has the biggest impact on a firm's PE ratio?

Khloe owns 18 percent of KLK Clothing that has a total of 139,000 shares of stock outstanding.Each share receives one vote for each open seat on the board.The next election will select three new directors.The market price per share is $31.How much does Khloe need to spend,if any,to guarantee her election to the board if the firm has a cumulative voting policy and no one else votes for her?

Shares of ABBO stock are currently selling for $14.43 a share.The last annual dividend paid was $1.61 a share,and dividends increase at a constant rate.If the market rate of return is 14 percent,what is the dividend growth rate?

An investor wants to purchase shares in a firm that has no growth opportunities but pays an annual dividend of $2.35.The market rate of return on similar securities is 17.5 percent.What is the maximum price the investor should pay for this stock?

The market in which new securities are originally sold to investors is called the ________ market.

Electronic communications networks (ECNs)

Which one of the following statements concerning dealers and brokers in the financial markets is correct?

Greener Grass Co.pays a constant annual dividend of $1 a share and has 1,000 shares of common stock outstanding.The company

The underlying assumption of the dividend growth model is that a stock is worth

Tall Tree Timber has annual net income of $213,640 and 72,000 shares of stock outstanding.Big Trees is a similar firm with similar growth opportunities that has 75,000 shares of stock outstanding with a market price of $31.80 a share and earnings per share of $1.48.What is the estimated value of Tall Tree Timber?

The Extreme Reaches Corp.'s last annual dividend was $1.98 per share.The company is planning on paying $2,$2,$2.50,and $3 a share over the next 4 years,respectively.After that,the dividend will be a constant $2.50 per share per year.What is the current price of this stock if the rate of return is 13 percent?

Feltwater Furniture has 134,000 shares of stock outstanding.The firm expects to earn net income of $286,000 next year with annual increases of 4 percent per year thereafter.The firm pays out 70 percent of its net income in dividends.The required return is 16 percent.What is the share price?