AC216 Unit 7 Assignment 5 - Earnings Per Share - Ronald Campbell
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Herzing University *
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Finance
Date
Jan 9, 2024
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xlsx
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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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