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Valuation with price/earnings multiples For each of the firms shown in the following table, use the data given to estimate its common stock value...
Valuation with price/earnings multiples For each of the firms shown in the following
table, use the data given to estimate its common stock value employing price/
earnings (P/E) multiples.
Assets Liabilities and stockholders' equity
Cash $ 40,000 Accounts payable $100,000
Marketable securities 60,000 Notes payable 30,000
Accounts receivable 120,000 Accrued wages 30,000
Inventories 160,000 Total current liabilities $160,000
Total current assets $380,000 Long-term debt $180,000
Land and buildings (net) $150,000 Preferred stock $ 80,000
Machinery and equipment 250,000 Common stock (10,000 shares) 260,000
Total fixed assets (net) $400,000 Retained earnings 100,000
Total assets $780,000 Total liabilities and stockholders' equity $780,000
Gallinas Industries Balance Sheet December 31
Firm Expected EPS Price/earnings multiple
A $3.00 6.2
B 4.50 10.0
C 1.80 12.6
D 2.40 8.9
E 5.10 15.0