Ratios are mostly calculated based on the financial statements of a firm. However, another group of...

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Ratios are mostly calculated based on the financial statementsof a firm. However, another group of ratios, called market-basedratios, relate to a firm’s observable market value, stock prices,and book values, integrating information from both the market andthe firm’s financial statements.
Consider the case of Blue Dog Manufacturing Corp.:
Blue Dog Manufacturing Corp. just reported a net income of$12,000,000, and its current stock price is $23.00 per share. BlueDog is forecasting an increase of 25% for its net income next year,but it also expects it will have to issue 1,900,000 new shares ofstock (raising its shares outstanding from 5,500,000 shares to7,400,000 shares).
If Blue Dog’s forecast turns out to be correct and itsprice-to-earnings (P/E) ratio does not change, what does managementexpect its stock price to be one year from now? (Hint: If youchoose to compute the firm’s price/earnings ratio, round its valueto four decimal places.)
a) $21.42 per share
b) $23.00 per share
c) $16.07 per share
d) $26.78 per share
.One year later, Blue Dog Manufacturing Corp.’s stock is tradingat $39.75, and the company reports its common equity value as$31,701,600. What is Blue Dog Manufacturing Corp.’smarket-to-book(M/B) ratio?(1.07x/22.27x/13.93x/9.29x) choose one
Can a company’s stock have a negative P/E ratio?yes/no (choose one)

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Q 1 Answer Option a 2142 per share Explanation i Before forecasting of increase in net income Earnings per share EPS Net income Number of shares 12000000 5500000 218 Market price per share MPS 23 See Answer

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Ratios are mostly calculated based on the financial statementsof a firm. However, another group of ratios, called market-basedratios, relate to a firm’s observable market value, stock prices,and book values, integrating information from both the market andthe firm’s financial statements.Consider the case of Blue Dog Manufacturing Corp.:Blue Dog Manufacturing Corp. just reported a net income of$12,000,000, and its current stock price is $23.00 per share. BlueDog is forecasting an increase of 25% for its net income next year,but it also expects it will have to issue 1,900,000 new shares ofstock (raising its shares outstanding from 5,500,000 shares to7,400,000 shares).If Blue Dog’s forecast turns out to be correct and itsprice-to-earnings (P/E) ratio does not change, what does managementexpect its stock price to be one year from now? (Hint: If youchoose to compute the firm’s price/earnings ratio, round its valueto four decimal places.)a) $21.42 per shareb) $23.00 per sharec) $16.07 per shared) $26.78 per share.One year later, Blue Dog Manufacturing Corp.’s stock is tradingat $39.75, and the company reports its common equity value as$31,701,600. What is Blue Dog Manufacturing Corp.’smarket-to-book(M/B) ratio?(1.07x/22.27x/13.93x/9.29x) choose oneCan a company’s stock have a negative P/E ratio?yes/no (choose one)