Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Concept explainers
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.
Topic Video
Question
Given the information above, the average P/E ratio 20X5–20X6 is closest to
A.
49.34.
B.
31.07.
C.
20.32.
D.
11.64.
Transcribed Image Text:The table presents financial data for two fiscal years, 20X6 and 20X5. Below is a detailed transcription and description of the figures reported:
| Fiscal Year-End | 20X6 | 20X5 |
|-----------------|-------|-------|
| Total shareholder’s equity | $70.10 million | $65.60 million |
| Net sales | $72.06 million | $92.65 million |
| Net income | $1.28 million | $0.92 million |
| Net cash flow from operations | $16.20 million | $15.20 million |
| Stock price | $14.40 | $10.65 |
| Shares outstanding | 4.115 million | 4.525 million |
Note: All figures except the stock price are expressed in millions.
### Analysis:
- **Total Shareholder’s Equity** and **Net Income** increased from 20X5 to 20X6, indicating a positive performance in equity returns and profitability.
- There was a decline in **Net Sales** from 20X5 to 20X6.
- **Net Cash Flow from Operations** saw a slight increase, suggesting improved cash generation from core operations.
- The **Stock Price** rose from $10.65 to $14.40, which could reflect better market perception or performance.
- The **number of Shares Outstanding** decreased, which might indicate a share buyback or other equity management actions.
This information provides insights into the company's financial health and operational efficiency over the two years.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education