The Value of Broadway-Brooks Inc

question 75

Multiple Choice

The value of Broadway-Brooks Inc.'s operations is $900 million, based on the free cash flow valuation model.Its balance sheet shows $70 million in accounts receivable, $50 million in inventory, $30 million in short-term investments that are unrelated to operations, $20 million in accounts payable, $110 million in notes payable, $90 million in long-term debt, $20 million in preferred stock, $140 million in retained earnings, and $280 million in total common equity.If the company has 25 million shares of stock outstanding, what is the best estimate of the stock's price per share?

• A) $23.00
• B) $25.56
• C) $28.40
• D) $31.24
• E) $34.36

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Definitions:

Price-Earnings Ratio

A valuation ratio for a company that measures its current share price relative to its per-share earnings.

Year 2

Commonly refers to the second year in a sequence or series, often used in accounting or longitudinal studies.

Book Value Per Share

A financial measure that divides a company's shareholders' equity by its number of shares outstanding, indicating the accounting value per share.

Price-Earnings Ratio

The Price-Earnings Ratio (P/E Ratio) is a financial metric used to evaluate the value of a company's shares, calculated by dividing the current market price of a stock by its earnings per share.