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ValentinkaMS [17]
3 years ago
10

Ornaments, Inc., is an all-equity firm with a total market value of $608,000 and 27,300 shares of stock outstanding. Management

believes the earnings before interest and taxes (EBIT) will be $86,600 if the economy is normal. If there is a recession, EBIT will be 25 percent lower, and if there is a boom, EBIT will be 35 percent higher. The tax rate is 35 percent. What is the EPS in a recession
Business
1 answer:
Stels [109]3 years ago
3 0

Answer:

The EPS in recession is $1.546 per share.

Explanation:

The earnings per share or EPS is a function of net income divided by the number of shares outstanding. The earnings per share calculates the dollar return per share that is earned in a year.

Earnings per share = Net Income / No of common shares outstanding

Where, Net Income = EBIT - Interest - Tax

The EBIT in recession will be = 86600 * (1-0.25) = $64950

The company is all equity financed so there is no interest cost.

Net Income in recession will be = 64950 - (64950 * 35%)  =  $42217.5

Thus, EPS in recession = 42217.5 / 27300  =  $1.546 per share

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Answer:

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Explanation:

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7 0
3 years ago
When writing a message to express condolences, you should mention the loss tactfully, recognize the good qualities of deceased,
Romashka-Z-Leto [24]

When writing a message to express condolences, you should mention the loss tactfully, recognize the good qualities of deceased, assure the receiver of your concern, offer assistance, and <u>conclude on a reassuring note.</u>

Explanation:

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3 0
4 years ago
Arrange the steps for conflict resolution in proper sequence. Every individual involved in the conflict is encouraged to offer a
Lyrx [107]

-Individuals involved in the conflict is encouraged to come together.

-Every individual involved in the conflict expresses his or her opinion in an open manner.

-Every individual involved in the conflict is encouraged to offer a solution.  

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8 0
4 years ago
Smith buys and sells equity securities. On December 15, 2021, Smith purchased $542,000 of Jones shares and elected the fair valu
zimovet [89]

Answer:

$46,000

Explanation:

We can find out the the revaluation gain that need to be reported at the year end by just deducting the the cost of the investment by its current fair value .

DATA

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Cost = 542,000

Revaluation gain = Current fair value - Cost

Revaluation gain = 588,000 - 542,000

Revaluation gain = $46,000

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4 years ago
Suppose american winemakers convince the federal government to issue a directive to serve only domestically produced wine at gov
Sever21 [200]

Answer:

B) rent seeking behavior

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Rent seeking behavior refers to actions carried out by businesses that try to seek benefits through government policies. In other words, the businesses will try to make the government give them some type of special treatment or special benefit at the expense of the general population.

In this case, the American winemakers were able to convince government officials to only serve domestic wine at government events. The problem is that the general population (taxpayers) are the ones that pay for that wine. American winemakers will benefit at the expense of the taxpayers.

4 0
4 years ago
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