All categories

3 years ago

Sankey Co. has earnings per share of $3.95. The benchmark PE is 18.8 times. What stock price would you consider appropriate

Business

1 answer:

trapecia [35]3 years ago

7 0

Answer:

Stock price = $74.26

Explanation:

<em>The value of a share can be determined using the price earning ratio model. According to this model, the price of a share is estimated as the EPS of the company multiplied by a representative (benchmark) price- earning (P/E) ratio</em> .

The ratio relates the price of a stock to its earning. A stock with a higher P/R indicates a high potent for growth.

Price of stock =Earnings per share( EPS) × benchmark P/E ratio

The appropriate comparative price earnings ratio in the question has been given as 18.8 times.

DATA-

EPS- 3.95

PE- 18.8

Stock price = 3.95 × 18.8= $74.26

Stock price = $74.26

You might be interested in

Moyas corporation sells a single product for $20 per unit. last year, the company's sales revenue was $300,000 and its net opera

lianna [129]

Net operating income was $24000
Fixed expenses=$96000
Sales=$300000
cost per unit=$20
unit sales=$15000 units
CM=$120,000
CM per unit=$8
BE units=FC/CM per unit=96000/8=12,000 units

5 0

3 years ago

Read 2 more answers

Superior has provided the following information for its recent year of operation: The common stock account balance at the beginn

yKpoI14uk [10]

Answer: $22000

Explanation:

The amount of Superior's dividend declarations during its recent year of operation will be calculated thus:

Ending retained earnings ($91000) = Beginning retained earnings ($75000) + Net income ($38000) - Dividend declared

$91000 = $113000 - Dividend declared

Dividend declared = $113000 - $91000

Dividend declared = $22000

Therefore, Superior's dividend declarations during its recent year of operation is $22000

7 0

2 years ago

Ron just started working for a car wash company two weeks ago. Ron's team members come back from breaks late, and do not worry t

s344n2d4d5 [400]

Answer:

I would say B would be the best answer.

Explanation:

You shouldn't try to push it onto yourself to fix, the owner/manager to fix the problem!

3 0

3 years ago

Wainright Co. has identified an investment project with the following cash flows. Year Cash Flow 1 $ 850 2 1,190 3 1,450 4 1,600

Mashutka [201]

Answer:

$4,238.05

Explanation:

The computation of the present value is shown below:

Years Cash flows Discount factor @7% Present value

1 $850.00 0.9345794393 $794.39

2 $1,190.00 0.8734387283 $1,039.39

3 $1,450.00 0.8162978769 $1,183.63

4 $1,600.00 0.762895212 $1,220.63

Total present value $4,238.05

8 0

3 years ago

At the beginning of the year, Horvath Company estimated the following: Overhead $270,000 Direct labor hours 90,000 Horvath uses

levacccp [35]

Answer:

overhead rate: $3 per labor hours

Appled overhead for January 25,050 dollars

Applied overhead: 268,800 dollar underapplied by 7,200 dollars

Explanation:

$\frac{Cost\: Of \:Manufacturing \:Overhead}{Cost \:Driver}= Overhead \:Rate$

expected overhead: 270,000

cost driver: labor hours.

expected labor hours: 90,000

overhead rate: 270,000 / 90,000 = 3

<u>Applied overhead for January</u>

8,350 labor hours x $3 overhead rate = 25,050

for the year:

89,600 x $ 3 = 268,800

actual overhead 276,000

Difference: 7,200

As the actual cost were higher; the overhead was underapplicated.

we need to capitalize more cost.

6 0

3 years ago