A P/E ratio is calculated in the middle of the accounting year. For a given share price, the company could use the most recent annualEPS, or it could use the total of the most recent four quarterly EPS numbers. Which of the following statements is not true?Multiple ChoiceThe ratio will be larger if the most recent annual EPS is used when earnings are decreasing.The ratio will be smaller if the EPS for the last four quarters are used when earnings are increasing.The ratio will be smaller if the most recent annual EPS is used when earnings are decreasing.The ratio will be larger if the EPS for the last four quarters are used when earnings are decreasingPrev25 of 50Next i

A P/E ratio is the ratio of market price per share (MPS) to earnings per share (EPS) P/E ratio will…

Answered: A P/E ratio is calculated in the middle…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

A condensed income statement for Stock Storage and a partially completed vertical analysis are presented below. Required: 1. Complete the vertical analysis by computing each missing line item as a percentage of sales revenues. 2. Does Stock's Cost of Goods sold for the current year, as a percentage of revenues, represent better or worse performance as compared to that for the previous year? 3. Has Stock"s net profit margin increased, or decreased, over the two years? Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Complete the vertical analysis by computing each missing line item as a percentage of sales revenues. (Round your answers to the nearest whole percent.) STOCK STORAGE Income Statement (summarized) (in millions of U.S. dollars) Current Year Previous Year Sales Revenues $ 2,090 100 % $ 2,170 100 % Cost of Goods Sold 1,697 81 % 1,661 % Selling, General, and Administrative Expenses 285 % 286 13 % Other Operating Expenses 51 2 %…
Suppose a stock had an initial price of $92 per share, paid a dividend of $2.30 per share during the year, and had an ending share price of $75.50. a. Compute the percentage total return. Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. b. What was the dividend yield? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. c. What was the capital gains yield? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g.132.16. Answer is complete but not entirely correct. a. Percentage total return b. Dividend yield c. Capital gains yield 13.04% 13.04% 14.62%
Use the following inputs and the finite horizon from of the residual income model to compute the value of Southern Trust Bank (STB) shares as of 31 December 2007: i. ROE will continue at 15% for the next five years and 10% thereafter with all earnings reinvested (no dividends paid) ii. Cost of equity is 10% iii. Beginning period book value at year-end 2007 is $10
use EXCEL and provide Cell References for Calculations.
The average industry PE ratio for a firm is 17.79. What should the current stock price of this firm be if it has projected earnings of $6.69 per share? Please round your answer to 2 decimal places.
If you look at stock prices over any year, you will find a high and low stock price for the year. Instead of a single benchmark PE ratio, we now have a high and low PE ratio for each year. We can use these ratios to calculate a high and a low stock price for the next year. Suppose we have the following information on a particular company over the past four years: Year 1 Year 2 Year 3 Year 4 High price $ 98.70 $ $ $131.70 Low price 73.53 EPS 122.30 89.64 148.33 70.32 116.85 7.98 9.73 10.81 12.20 Earnings are projected to grow at 5 percent over the next year. a. What is your high target stock price over the next year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is your low target stock price over the next year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. High target stock price b. Low target stock price 4
Which of the following statements is TRUE? When EBIT and total assets both increase by 25%, the basic earnings power will also increase O a. An increase in the quick ratio over time means that the company's liquidity position is improving. O b. approximately by 25%. A lower than the industry's average inventory turnover ratio means that the company turns over or sells O C. and replaces its inventory more times per year. A higher than industry average P/E ratio indicates the company's stock must be overvalued. d.
A compay expects earnings to be $3.18 next year, after earning $3.00 this year. With PEG ratio of 2.00x, the company's current stock price is closet to: A. $36.00 B. $38.16 C. $39.30 D. $40.45
In practice, a common way to value a share of stock when a company pays dividends is to value the dividends over the next five years or so, then find the terminal stock price using a benchmark PE ratio. Suppose a company just paid a dividend of $1.90. The dividends are expected to grow at 11 percent over the next five years. In five years, the estimated payout ratio is 48 percent and the benchmark PE ratio is 36. a. What is the target stock price in five years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the stock price today assuming a required return of 13 percent on this stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Company Z-prime's earnings and dividends per share are expected to grow by 4% a year. Its growth will stop after year 4. In year 5 and afterward, it will pay out all earnings as dividends. Assume next year's dividend is $9, the cost of equity is 9%, and next year's EPS is $14. What is Z-prime's stock price? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. Stock price
Which of the following is most likely true concerning the stability and trend of earnings? 1. require at leaset 5 years of historical data to be meaningful 2. are not factored in the analysis of revenues 3. depend on the trend of a dingle industry 4. are key factors when calculating cost of sales
If you look at stock prices over any year, you will find a high and low stock price for the year. Instead of a single benchmark PE ratio, we now have a high and low PE ratio for each year. We can use these ratios to calculate a high and a low stock price for the next year. Suppose we have the following information on a particular company over the past four years: Year 1 Year 2 Year 3 Year 4 High price $ 99.70 $ 123.30 $ 132.70 $ 149.33 Low price 74.53 90.64 71.32 117.85 EPS 8.98 10.73 11.81 13.20 Earnings are projected to grow at 9 percent over the next year. a. What is your high target stock price over the next year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is your low target stock price over the next year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS