Company XYZ closed at $46.49 per share with a P/E ratio of 16.27. Answer the following questions. a. How much were earnings per share? b. Does the stock seem overpriced, underpriced, or about right given that the historical P/E ratio is 12-14? a. How much were earnings per share? $ (Round to the nearest cent as needed.)
Financial Ratios
A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.
Return on Equity
The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.
Earning per share
A higher EPS denotes more value since shareholders will pay more for a company's stock if they believe it is making more money than the price of its shares.
EPS can be calculated in a number of ways, including on a diluted basis or by eliminating unusual items and discontinued activities.
Like other financial indicators, earnings per share is most useful when contrasted with similar businesses, organizations in the same industry, or across time.
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