Unit 4.1 Stock Valuation Methods

Question 1

Price/EBITDA Ratio

Answer 1

Market Price per share/EBITDA per share

Question 2

Book Value per share

Answer 2

(Total Stockholders Equity-Preferred Equity)/# of Common Shares Outstanding

Question 3

Price-Earnings (P/E) Ratio

Answer 3

Market Price/EPS

Question 4

Market-to-Book Ratio

Answer 4

Market price per share/Book price per share

Question 5

Price-Sales Ratio

Answer 5

Market price per share/Sales per share

Question 6

Constant Growth Dividend Discount Model

Answer 6

(Last annual dividend paid x (1+ Growth Rate)/(Discount Rate- Dividend Growth Rate)

Question 7

Preferred Stock Valuation

Answer 7

Dividend per share/Cost of Capital

Question 8

Earnings per share (EPS)

Answer 8

Net income available to common shareholders/Weighted average common shares outstanding

Question 9

Earning Yield

Answer 9

Earnings per share/Market Price per share

Question 10

Dividend Payout Ratio

Answer 10

Dividends to common shareholders/Income Available to common shareholders

Question 11

Dividend Yield

Answer 11

Dividend per share/Market price per share

Question 12

Shareholder Return

Answer 12

(Ending stock price - beginning stock price + Annual dividends per share)/Beginning stock price