World Wide Web Wares (4W, for short) is an online retailer of small kitchen appliances and utensils. The firm has been around for a few years and has created a nice market niche for itself. In fact, it actually turned a profit last year, albeit a fairly small one. After doing some basic research on the company, you've decided to take a closer look. You plan to use the price-to-sales ratio to value the stock, and you have collected P/S multiples on the following Internet retailer stocks: (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Company P/S Multiples
Amazing.com 4.5 Really
Really Cooking.com 3.9
Fixtures & Appliances Online 3.8
Find the average P/S ratio for these three firms. Given that 4W is expected to generate $44 million in sales next year, and will have 20 million shares of stock outstanding, use the average? P/S ratio you computed above to put a value on 4W's stock.
1. The average P/S ratio for the 3 firms is nothing. (Round to two decimal places.)
2. The value of 4W's stock is $ nothing. (Round to the nearest cent)