Answer:
Botox Facial Care
20X1 20X2
a. Earnings per share $1.65 $1.93
b. P/E ratio 25.45x 27.46x
c. The P/E ratio changed from 25.45x to 27.46x following a change in earnings per share and the stock price per share.
Explanation:
a) Data and Calculations:
20X1 20X2
Earnings after taxes $330,000 $386,000
Outstanding shares 200,000 200,000
Earnings per share $1.65 $1.93
Stock price $42.00 $53.00
P/E ratio 25.45x 27.46x
Earnings per share = Earnings after taxes/Outstanding shares
P/E ratio = Stock price/Earnings per share
Answer:
C. 3.91; more
Explanation:
the first part of the question is missing. It involved several aspects of Big Valley including its current and quick ratios, ROE and how they compare to the industry's average (they are generally lower than the industry's average).
This particular question refers to times interest earned ratio = EBIT / interest expense = 3.91, and how it compares to the industry's average (it is higher than the industry's average).
Since Big Valley performs poorly against the industry's average when comparing the other 3 metrics, but performs very well in the times interest ratio, it means that Big Valley has a low debt ratio. A low debt ratio results in lower financial leverage and lower interest expense.
Answer: Option B
Explanation: In simple words, functional departmentalization refers to the process in which an organisation makes different departments within, for performing different tasks.
For example - all the activities related to procurement of money will be performed by finance department.
The main advantage of doing so is that each department will perform only specific assigned activities and all the employees working in the departments will be those who are experts in the field.
