Question

Data Table Hajjar's, a home-improvement store chain, reported these summarized figures in thousands): (Click the icon to view the income statement) Click the icon to view the balance sheet) Use the financial data when making the following calculations: a. Compute earnings per share (EPS) for Hajjar's. The number of shares outstanding was 750,000. b. Compute Hajjar's pricelearnings ratio. The price of a share of Hajjar's is $65.50. a. First identify the formula, then calculate the earnings per share (EPS) for Hajjar's. (If an item has a zero balance, enter a 50 in the input box. Round your answer to two decimal pla ( EPS ( Hajjar's Income Statement For The Year Ended December 31, 2014 (amounts in thousands) Sales revenues $ 48,234.750 Less: Cost of goods sold 21.790.000 Gross profit $ 26,444,750 Less: Operating expenses 5,074,250 Operating income $ 21,370,500 Less: Interest expense 217,800 Income before income taxes $ 21,152,700 Less: Income tax expense 1,925,750 Net income $ 19,226,950 b. Identify the formula, then calculate Hajjar's price/earnings (P/E) ratio. (Round all values to two decimal places.) P/E ratio times

Answer 1

Calculation of earning per share (EPS) for 2014

Formula for EPS would be as follows:

EPS = Net income/No.of shares Outstanding

EPS = 19,226,950/750,000 = $25.6359 or $25.64 per share

Calculation of price earning ratio

PE Ratio = Market price per share/EPS

PE Ratio = 65.50/25.64 = 2.55 times