Calculating Earnings Per Share Price Earnings Ratio 549422

As a stockholder in Bozo Oil Company, you receive its annual report. In the financial statements, the firm has reported assets of $9 million, liabilities of $5 million, after-tax earnings of $2 million, and 750,000 outstanding shares of common stock.

a.Calculate the earnings per share of Bozo Oil’s common stock.

b.Assuming that a share of Bozo Oil’s common stock has a market value of $40, what is the firm’s price-earnings ratio?

c.Calculate the book value of a share of Bozo Oil’s common stock.