Need help In April 2005, General Motors traded at $28 per share on a book valueof $49 per share. Analysts were estimating that GM would earn 69 centsper share for the year ending December 2005. The firm was paying anannual dividend at the time of $2.00 per share.Calculate the return on common equity (ROCE) that analysts wereforecasting for 2005.

Explanation of Return on Common Equity (ROCE):Return on Common Equity (ROCE) is a financial ratio…

Answered: In April 2005, General Motors traded at…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter16: Financial Statement Analysis

Section: Chapter Questions

Problem 2MAD

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A company expects EPS to be $2.52 next year. The industry average P/E ratio is 23.99 and Enterprise multiple is 7.57. The EBITDA for the company is $22.97 million. What is an estimate of the stock price using the method of comparables for P/E multiples? Round your answer to two (2) decimal places.
In the year 2016, Al-Jazeerah and Company's shares traded at $ 30 per share; this is a 25%the decline from its peak. Forecasted earning per share for 2016 & 2017 were $3.05 & $3.2 . Adividend of $ 0.5 per share was indicated for the fiscal year 2017.(a) Calculate AAA's normal forward P/E and the forward P/E it traded in 2016.Use a required rate of return of 10%. (b) Calculate the intrinsic P/E implied by the analyst' forecasts with the assumption thatthere will be no abnormal earning growth after 2018.(c) Explain why an analyst prefers a leading P/E ratio over a trailing P/E ratio? (d) Explain why a normal forward P/E ratio and a normal trailing P/E ratio always differ by 1.(e) Explain why Interest payment should not be part of cash flow from operations. (f) Explain why might a firm trade at a price to book ratio greater than 1?
A company recently paid a $1.35 dividend. The annual dividend is expected to grow at a 18.5 percent rate. At a current stock price of $40.85, what return are shareholders expecting? (Do not round intermediate calculations. Round your percentage answer to 2 decimal places. (e.g., 32.16))
Pacific Storage expects to have earnings per share of $5.25 in 2005, and $5.65 in 2006. The average price-earnings ratio for General industry is 10X (times). Pacific Storage has traditionally had a P/E ratio 12% higher than the industry, and in 2005 it is expected to be 15% higher than the industry. Calculate the expected price of Pacific's stock price in 2005 and 2006, based on expectations of EPS and P/E ratios.
Heavy Rain Corporation just paid a dividend of $4.33 per share, and the firm is expected to experience constant growth of 2.32% over the foreseeable future. The common stock is currently selling for $58.50 per share. What is Heavy Rain's cost of retained earnings using the Gordon Model (DDM) approach? Round the answers to two decimal places in percentage form
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A company's stock price rose 2.8% in 2011, and in 2012, it increased 79.7%.a. Compute the geometric mean rate of return for the two-year period 2011-2012. (Hint: Denote an increase of 79.7% by .797.)b. If someone purchased $1,000 of the company's stock at the start of 2011, what was its value at the end of 2012?c. Over the same period, another company had a geometric mean rate of return of 10.7%. If someone purchased $1,000 of the other company's stock, how would its value compare to the value found in part (b)?
Ametek Co's last annual dividend was $2.50 per share. its common stock is selling for $36.00 per share. if analysts are projecting 11% growth in earnings and dividends for the foreseeable future, what is Ametek's cost of common equity? a) 7.7% b) 18.7% c) 1.87% d) 11%
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(Calculating rates of return) The S&P stock index represents a portfolio comprised of 500 large publicly traded companies. On December 24, 2007, the index had a value of 1,410 and on December 24, 2008, the index was approximately 921. If the average dividend paid on the stocks in the index is approximately 4.0 percent of the value of the index at the beginning of the year, what is the rate of retum eamed on the S&P index? What is your assessment of the relative riskiness of investing in a single stock such as Google compared to investing in the S&P index (recall from Chapter 2 that you can purchase mutual funds that mimic the returns of the index)? KIYD The rate of return earned on the S&P 500 is % (Round to two decimal places.)

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