Investments
11th Edition
ISBN: 9781259277177
Author: Zvi Bodie Professor, Alex Kane, Alan J. Marcus Professor
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 19, Problem 7CP
A
Summary Introduction
To calculate: The current and 5-year price- earnings and price-book ratios for Eastover and Southampton.
Introduction: The price-earnings ratio is the ratio of current share price o the price of per-share of the firm. The high value of this ratio means the investor has growth in the future. In general, the value should be lies between 20 and 25.
B
Summary Introduction
To explain: The disadvantage of the relative price-earning and price-book ratios.
Introduction: The relative price-earnings is the ratio of current price-earning to the relative price index. It gives the relative value of P/E. the price-book value can be varied in the future. It cannot tell about the future growth of the firm.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Calculate the following ratios for 2021. Express answers to two decimal places.
4.1.1 Gross margin
4.1.2 Inventory turnover
4.1.3 Acid test ratio
4.1.4 Debt to equity
4.1.5 Earnings per share
4.2 Are the collections from credit sales satisfactory? Motivate your answer by using the relevant ratio.
4.3 Would the shareholders of Harmony Limited be satisfied with the return on their investments?
Motivate your answer with the use of a relevant ratio.
4.4 Suggest THREE (3) ways in which Harmony Limited can improve its gross margin ratio, without increasing the selling price of the inventories.
Evaluate Aritzia’s profitability for 2022 compared with 2021. In your analysis, compute the following ratios and then comment on what those ratios indicate.
1. Return on sales
2. Asset turnover
3. Return on assets
4. Leverage ratio
5. Return on equity
6. Gross profit percentage
7. Earnings per share (show computation)
8. Book value per shareOperational and Financial Summary
c. Using DuPont framework, compute Bersatu Berhad’s returns on equity for 2020 and 2021? Show all formulas and calculations.d. Is there any significant change in the returns on equity over the two years? What conclusion can you arrive with regards to thefactors influencing the returns on equity
Chapter 19 Solutions
Investments
Ch. 19 - Prob. 1PSCh. 19 - Prob. 2PSCh. 19 - Prob. 3PSCh. 19 - Prob. 4PSCh. 19 - Prob. 5PSCh. 19 - Prob. 6PSCh. 19 - Prob. 7PSCh. 19 - Prob. 8PSCh. 19 - Prob. 9PSCh. 19 - Prob. 10PS
Ch. 19 - Prob. 11PSCh. 19 - Prob. 12PSCh. 19 - Prob. 13PSCh. 19 - Prob. 14PSCh. 19 - Prob. 15PSCh. 19 - Prob. 16PSCh. 19 - Prob. 1CPCh. 19 - Prob. 2CPCh. 19 - Prob. 3CPCh. 19 - Prob. 4CPCh. 19 - Prob. 5CPCh. 19 - Prob. 6CPCh. 19 - Prob. 7CPCh. 19 - Prob. 8CPCh. 19 - Prob. 9CPCh. 19 - Prob. 10CPCh. 19 - Prob. 11CPCh. 19 - Prob. 12CPCh. 19 - Prob. 13CP
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.Similar questions
- A.Perform horizontal analysisand vertical analysis (for 2020only)on the income statement. In your answer please remember to indicate if it is an INCREASE or (DECREASE) and round your findings to ONE decimal place [e.g. -32.996% is - 33.0% or minus 33.0% or (33.0%). B. Comment on the significant changes disclosed by the comparative statement of comprehensive income. What has caused the changes to occur? C. Prepare a statement of retained earnings for the year ended June 30, 2020. (Retained earnings at July 1, 2019 were $58,000, dividends declared and paid during the financial year were $37,000. D. Explain how profits for the year ended June 30, 2019 were $126,700 yet Retained Earnings at July 1, 2019 were only $58,000.arrow_forwardHello! look at the attached images and answer: (a) Calculate ratios for the year ended 31 December 2021 (showing your workings) for Primrose Plc, equivalent to those provided above. i. Return on year-end capital employed ii. Net asset turnover iii. Gross profit margin iv. Net profit margin v. Current ratio vi. Closing inventory holding period vii. Trade receivables’ collection period viii. Trade payables’ payment period ix. Dividend yield x. Dividend cover (b) Analyse the financial performance and position of Primrose Plc for the year ended 31 December 2021 compared to 31 December 2020. (c) Explain the uses and the general limitations of ratio analysis. Thanks a lot!arrow_forwardAdd a comment for this solution in table.arrow_forward
- Question 1 Mabel is a potter and sells her pottery at stalls that she rents in four tourist information centres across the south of England. Extracts from her financial statements for the years ended 31 December 2021 and 2020 are shown below. Statement of profit or loss for the year ended 31 December: 2021 28,900 |(16,500) 12,400 (3,800) 8,600 |(4,000) 4,600 2020 Revenue 27,200 (14,000) 13,200 (3,600) 9,600 Cost of sales Gross profit Operating expenses Operating profit Non-operating expenses Net profit 9,600 Statement of financial position as at 31 December: 2021 Non-current assets Current assets Total assets 22,660 4,360 27,020 2020 20,920 3,750 24,670 Equity Non-current liabilities Current liabilities Equity and liabilities 20,940 3,000 3,080 27,020 16,340 3,500 4,830 24,670 The following information is also relevant: In July 2021 the rent on one of Mabel's stalls was increased significantly for the third time in three years so she decided not to renew the annual contract. She sold…arrow_forwardThe following information is taken from Tanaka Bhd for the year ended 31 December2020.Preference dividend declared and fully paid in 2020: RM100,000Ordinary dividend declared and fully paid in 2020: RM3,960,000Preference share marketable price per unit at 31 December 2020: RM4.60Ordinary share marketable price per unit at 31 December 2020: RM9.00 Required:a. Calculate the following ratio for 2020: Industry average ratioi. Current ratio 2.3 : 1ii. Quick ratio 1.1 : 1iii. Asset turnover 2.0Assumption: all sales in credit; finance expense means interest; ordinary share outstandingthroughout both years = 10,000,000 shares.arrow_forwardThe following information is taken from Tanaka Bhd for the year ended 31 December2020.Preference dividend declared and fully paid in 2020: RM100,000Ordinary dividend declared and fully paid in 2020: RM3,960,000Preference share marketable price per unit at 31 December 2020: RM4.60Ordinary share marketable price per unit at 31 December 2020: RM9.00 Required:a. Calculate the following ratio for 2020: Industry average ratio iv. Profit margin 4.0%v. Earnings per share RM0.46vi. Rate of return on total assets 11.0%Assumption: all sales in credit; finance expense means interest; ordinary share outstandingthroughout both years = 10,000,000 shares.arrow_forward
- Hello! look at the attached images and answee the following points: (a) Calculate ratios for the year ended 31 December 2021 (showing your workings) for Primrose Plc, equivalent to those provided above. Return on year-end capital employed Net asset turnover Gross profit margin Net profit margin Current ratio Closing inventory holding period Trade receivables’ collection period viii. Trade payables’ payment period Dividend yield Dividend cover (b) Analyse the financial performance and position of Primrose Plc for the year ended 31 December 2021 compared to 31 December 2020. (c) Explain the uses and the general limitations of ratio analysis. Thank you a lot!arrow_forwardThe image uploaded is the calculation of Socite Generale Bank, Ghana, Profitability ratios, shorter liquidity ratios, long-term liquidity ratios, and investment ratios for 2020, 2021, 2022. A base year of 2019 was also added. Evaluate the financial performance by comparing the three (3) years' financial performance that is 2020, 2021, and 2022 I have provided in the table with the base year.arrow_forwardComment on the information that each ratio provides. Based on the results, why is there a gap between book and market values for your company?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning