TwitterMe, Inc., is a new company and currently has negative earnings. The company’s sales are $2 million and there are 130,000 shares outstanding.
If the benchmark price–sales ratio is 5, what is your estimate of an appropriate stock price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
What if the price–sales ratio were 4.4? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)