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In Business / High School | 2025-07-08

Asian Food Corporation has net income of Rs 275,000. The firm paid out Rs 150,000 in cash dividends, and it has ending total equity of Rs 6 million. If the firm currently has 125,000 shares of common stock outstanding, what is earnings per share? Dividends per share? Book value per share? If the stock currently sells for Rs 95 per share, what is the market-to-book ratio? The price-earnings ratio?

Asked by edog468

Answer (1)

Let's break down each part of the question step-by-step to calculate the various financial metrics.

Earnings Per Share (EPS):
The Earnings Per Share (EPS) is calculated by taking the net income and dividing it by the number of shares outstanding.
EPS = Shares Outstanding Net Income ​
Given:

Net Income: Rs 275,000
Shares Outstanding: 125,000

Plugging in the values:
EPS = 125 , 000 275 , 000 ​ = Rs 2.20 per share

Dividends Per Share (DPS):
The Dividends Per Share (DPS) is calculated by dividing the total dividends paid out by the number of shares outstanding.
DPS = Shares Outstanding Dividends Paid ​
Given:

Dividends Paid: Rs 150,000
Shares Outstanding: 125,000

Plugging in the values:
DPS = 125 , 000 150 , 000 ​ = Rs 1.20 per share

Book Value Per Share (BVPS):
The Book Value Per Share (BVPS) is calculated by taking the total equity and dividing it by the number of shares outstanding.
BVPS = Shares Outstanding Total Equity ​
Given:

Total Equity: Rs 6,000,000
Shares Outstanding: 125,000

Plugging in the values:
BVPS = 125 , 000 6 , 000 , 000 ​ = Rs 48 per share

Market-to-Book Ratio:
The Market-to-Book Ratio is calculated by dividing the current stock price by the book value per share.
Market-to-Book Ratio = BVPS Current Stock Price ​
Given:

Current Stock Price: Rs 95
BVPS: Rs 48

Plugging in the values:
Market-to-Book Ratio = 48 95 ​ ≈ 1.98

Price-Earnings Ratio (P/E Ratio):
The Price-Earnings Ratio is calculated by dividing the current stock price by the earnings per share.
P/E Ratio = EPS Current Stock Price ​
Given:

Current Stock Price: Rs 95
EPS: Rs 2.20

Plugging in the values:
P/E Ratio = 2.20 95 ​ ≈ 43.18


In summary, the calculations result in the following:

Earnings Per Share (EPS): Rs 2.20
Dividends Per Share (DPS): Rs 1.20
Book Value Per Share (BVPS): Rs 48
Market-to-Book Ratio: 1.98
Price-Earnings Ratio (P/E Ratio): 43.18

Answered by SophiaElizab | 2025-07-21

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