Last year, Rec Room Sports reported earnings per share of $8.40 when its stock price was $201.60. This year, its earnings increased by 25%. If the P/E ratio remains constant, what is likely to be the price of the stock?

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
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What is likely to be the price of the stock on these financial accounting question?

Last year, Rec Room Sports reported earnings per share of $8.40
when its stock price was $201.60. This year, its earnings increased
by 25%.
If the P/E ratio remains constant, what is likely to be the price of
the stock?
Transcribed Image Text:Last year, Rec Room Sports reported earnings per share of $8.40 when its stock price was $201.60. This year, its earnings increased by 25%. If the P/E ratio remains constant, what is likely to be the price of the stock?
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