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Igoryamba
3 years ago
7

12. A company has an EPS of $2.00, a book value per share of $20, and a market/book ratio of 1.2x. what is its P/E ratio

Business
1 answer:
Tcecarenko [31]3 years ago
5 0

Answer:

P/E Ratio = 12x or 12 times

Explanation:

We know that the P/E ratio is calculated by dividing the price per share by the earnings per share or EPS.

P/E = Price per share / Earnings per share

We already have EPS. We need to calculate the price per share.

It is given that book value per share is $20 and the market to book ratio is 1.2x or 1.2 times. Using the formula for market to book ratio, we calculate the market price per share to be,

M/B = Market price per share / Book value per share

1.2 = Market price per share / 20

20 * 1.2 = Market price per share

Market price per share = $24

So, P/E ratio = 24 / 2

P/E Ratio = 12x or 12 times

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1 year ago
The promotional mix consists of:a. public relations, direct marketing, personal selling, and publicityb. advertising, personal s
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Answer: B

Explanation:

7 0
3 years ago
Tiptoe shoes had annual revenues of $201,000, expenses of $111,700, and dividends of $24,400 during the current year. the retain
Andreyy89

Entry to close the income summary account at the end of the year:


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4 0
3 years ago
When Hope Springs Water Co. was looking to complete the _________ phase of the new product development process, the company coul
My name is Ann [436]

Answer:

Idea generation

Explanation:

Based on the information provided within the question it seems that the phase that is being described is the Idea generation. This phase refers to the process creating new approaches for finding solutions to existing problems or creating new ideas/products. This phase requires a lot of research, input, and data analysis from many sources in order to generate the best ideas that will make the help the company succeed.

5 0
3 years ago
Evans Ltd. is now considering the possibility of offering a lifetime membership option to its subscribers. Under this proposal,
Ahat [919]

Answer: $329.75

Explanation:

The one year subscription is $40 per year. It is estimated that the average age of current subscribers is 38 and they will leave on average to 78. This means that they will leave for,

= 78 - 38

= 40 years

Evans Ltd  average interest rate on long-term debt is 12% so this means that we can use that 12% as a discount rate for the cash-flow expected.

I have attached a Present Value Interest Factor of an Annuity table to this question. It helps calculate annuities faster.

The above can be treated as an annuity because the $40 is constant every year.

The present value of the $40 over 40 years can be calculated by,

= $40 * present value Interest Factor of an Annuity for 40 years at 12% (look at the table for where 40 years on the y axis intersects with 12% on the x axis)

= $40 * 8.2438 (this is the figure when it is not rounded off to 3 dp)

= $329.752

= $329.75

This shows that the lifetime flat fee of $480 is more profitable for Evans Ltd as opposed to the yearly subscription. They should therefore try to sell more of the lifetime contract with the flat fee.

3 0
3 years ago
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