What is the stock price of Ronnie Co. with a PS ratio of 2.14 times and sales per share of $26.06?
The stock price of Ronnie Co., given a PS ratio of 2.14 times and sales per share of $26.06, is $55.77.
Understanding the Calculation
Sales per share is a financial metric that reflects a company's total sales divided by the number of outstanding shares. In this case, Ronnie Co. has a sales per share of $26.06. The price-to-sales (PS) ratio, on the other hand, is a valuation metric that compares the market capitalization of a company to its total sales revenue.
To calculate the stock price of Ronnie Co. based on the given data, we need to multiply the sales per share by the PS ratio. The formula for this calculation is:
Stock Price = Sales Per Share * PS Ratio
Plugging in the numbers:
Stock Price = $26.06 * 2.14 = $55.77
Therefore, the correct answer is option C: $55.77.
In conclusion, understanding key financial ratios like the price-to-sales ratio can help investors evaluate the value of a company's stock. By analyzing sales per share and the PS ratio, investors can make informed decisions regarding stock prices and investment opportunities.