AC216 Unit 7 Assignment 5 - Earnings Per Share - Ronald Campbell

xlsx

School

Herzing University *

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Course

216

Subject

Finance

Date

Jan 9, 2024

Type

xlsx

Pages

1

Uploaded by aliciameyers22

Report
Financial Data presented in Millions. Market Price $ 42.50 $ 15.95 $ 107.00 Shares outstanding 5 12 8 Income Statement Yakima Snake Columbia Sales 110.0 200.0 50.0 Cost of Goods Sold 55.0 70.0 10.0 Gross Margin 55.0 130.0 40.0 Selling and Admin 13.8 39.0 8.0 Income from Operations 41.3 91.0 32.0 Interest Expense 3.0 15.0 7.0 Earnings before taxes 38.3 76.0 25.0 Income tax expense 8.42 16.72 5.50 Net income 29.84 59.28 19.50 Net Profit Margin 27% 30% 39% Earnings Per share 5.97 4.94 2.44 Price Earnings 7.12 3.23 43.85 Essay questions: 1 2Comment on each company's Price Earnings Ratio Calcualte the Profit Margin, Earnings per share and Price Earnings Ratio for each of these three companies. Why is Columbia's Earnings Per Share so low when they have the highest Profit Margin? And Conversly Yakima has the higest Earnings Per Share with the lowest profit margin. Explain this. Columbia has the lowest earings per share while having the highest profit margin because earnings per share is calculated using the number of outstanding shares with no relation to the company's profitablility in terms of performance. The same stands for Yakima. The EPS is the amount of money they have for each individual share. WHile profit margin is the percentage of profit that each company ahs that indicates the financial health. The Price arnings Ratio looks at the company's market price and EPS to determine whether the company is trading at a premium or discount. WHen looking at these three companies people would be most interested in looking into Yakima when buying stock due to its numbers being steady. Compared to Snake where it has a low P/E ratio and Columbia has an uncomfortably high P/E. This tells me that Columbia is an overvalued company and Snake is undervalued.
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