Homework Answers
Correct answer is Option (B) Price to Earnings Ratio
The price to earning ratio is computed by dividing Market Price by The earnings per share. So, when the net income is high, Ratio will be very low and vice versa. So, the ratio won't be sufficient to take a decision. So, at that scenario the ratio shall not be useful.
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When a company has unusually high or low net income, the is not the most useful...
When earnings are volatile, the ________ ratio can be useful in evaluating a company because ________...
When earnings are volatile, the ________ ratio can be useful in evaluating a company because ________ value is generally more stable than net income. A. Price-to-Book; book B. Price-to-Earnings; book C. Price-to-Earnings; market D. Price-to-Book; market
When comparing investment alternatives to each other, which is the most useful ratio or figure? Earnings...
When comparing investment alternatives to each other, which is the most useful ratio or figure? Earnings Per Share (EPS) Price-Earnings ratio (PE) Market Value Per Share Book Value Per Share Profit Margin
QUESTION 16 A company has high operating leverage when: A small percentage changes in revenue produce...
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1. Which of the following statements is most likely to be correct about price multiples based...
1. Which of the following statements is most likely to be correct about price multiples based on fundamentals? A. Price multiples are sensitive to the inputs. B. A stock may be overvalued using the price multiple method but undervalued using the discounted cash flow models. C. Price multiples are most reliable when the firm has assets with ready market values. 2. A firm has a required rate of return that is higher than its ROE. Assuming all other factors remain...
Green Caterpillar Garden Supplies Inc. just reported earnings after tax (also called net income) of $95,000,000,...
Green Caterpillar Garden Supplies Inc. just reported earnings after tax (also called net income) of $95,000,000, and a current stock price of $17.50 per share. The company is forecasting an increase of 25% for its after-tax income next year, but it also expects it will have to issue 2,800,000 new shares of stock (raising its shares outstanding from 5,500,000 to 8,300,000). If Green Caterpillar's forecast turns out to be correct and its price-to-earnings (P/E) ratio does not change, what does...
When a firm with an extremely high price/earnings ratio purchases a firm with a very low...
When a firm with an extremely high price/earnings ratio purchases a firm with a very low price/ earnings ratio in an exchange of stock, its earnings per share will increase. Do you think firms are more likely to acquire other firms when it results in an increase in their earnings per share? Is it beneficial to shareholders to initiate a takeover for these reasons?
e-Bay Inc. provides the following information for the year 2015: Net income $260,000 Market price per...
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A company with 0 net debt has sales of 10m, EBIT of 2m And net income...
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URGENT!!! Please help me understand this. A company has net income of $880,000; its weighted-average common...
URGENT!!! Please help me understand this. A company has net income of $880,000; its weighted-average common shares outstanding are 176,000. Its dividend per share is $1.15, its market price per share is $102, and its book value per share is $97.00. Its price-earnings ratio equals:
1. options for a: high or low options for b:BrainGames Inc. or IntelliGames Inc. options for...
1. options for a: high or low
options for b:BrainGames Inc. or IntelliGames Inc.
options for c:BrainGames Inc. or IntelliGames Inc
2. options for a:lower or higher
options for b:lower or greater
3. options for a: 0.80 or 1.05x
options for b: higher or lower
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Green Caterpillar Garden Supplies Inc. just reported earnings after tax (also called net income) of $95,000,000, and a current stock price of $17.50 per share. The company is forecasting an increase of 25% for its after-tax income next year, but it also expects it will have to issue 2,800,000 new shares of stock (raising its shares outstanding from 5,500,000 to 8,300,000). If Green Caterpillar's forecast turns out to be correct and its price-to-earnings (P/E) ratio does not change, what does...
e-Bay Inc. provides the following information for the year 2015: Net income $260,000 Market price per share of common stock $50 per share Dividends paid $200,000 Common stock outstanding at Jan 1, 2015 170,000 shares Common stock outstanding at Dec 31, 2015 240,000 shares The company has no preferred stock outstanding. Calculate the price/earnings ratio of common stock. O A. 32.68 times OB. 46.30 times OC. 50.00 times OD. 39.42 times
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options for b:BrainGames Inc. or IntelliGames Inc.
options for c:BrainGames Inc. or IntelliGames Inc
2. options for a:lower or higher
options for b:lower or greater
3. options for a: 0.80 or 1.05x
options for b: higher or lower
9. Asset management ratios Which of the following is not an asset management ratio? The average collection period O A days sales outstanding ratio O A price-earnings ratio A inventory turnover ratio Johnny Appleseed Brewing...
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