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The current price of digital X Industries stock is $44 per share. Current sales per share...

The current price of digital X Industries stock is $44 per share. Current sales per share are $21.35, the sales growth rate is 4 percent, and does not pay a dividend. The expected return on Digital X stock is 13 percent.

Calculate the sales per share one year ahead.

Calculate the P/S ratio one year ahead.

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Answer #1

Solution

Sales Per Share on year ahead
Current Sales Per Share * ( 1 + Growth)
$21.35 * (1 + 0.04)
$21.35 * 1.04
$22.204
P/S Ratio one year ahead
Price / Sales Per Share
Price per share one year ahead = $44 + 13% = $49.72
Sales per share one per year ahead = $22.204
P/S = $49.72 / $22.204
2.24
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