Why is earnings per share called “the bottom line” and should it be? If one firm...
Homework Answers
1. Earnings per share called “the bottom line” because Bottom line can be referred to any activities that may build/decline net income or an organization's general benefit. So, basically, Bottom line is a company's net income and it shows the worth of the company. We all know that earning per share Earnings per share also shows what is the financial worth of a company. So that's why earnings per share should be called “the bottom line”
2. The firm which is growing would get a higher number of sales in comparison to the firm which is not growing and that's why the growing firm's inventory turnover proportion would be higher than that of the non-growing firm. And this is how it distorts a comparison of their inventory turnover ratios.
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Why is earnings per share called “the bottom line” and should
it be?
If one firm...
How much should a share of stock be worth for a firm whose earnings per share...
How much should a share of stock be worth for a firm whose earnings per share are $4 if the industry's average P/E is 11? Select one: a. $48 b. $88 c. $44 d. $40
Please answer the following questions thoroughly in your own words.(600 Words) Why is earnings per share...
Please answer the following questions thoroughly in your own words.(600 Words) Why is earnings per share called "the bottom line"? What is EBIT, or operating income? What is EBITDA? Which is more like a snapshot of the firm's operations-the balance sheet or the income statement? Explain your answer.
DuPONT ANALYSIS A firm has been experiencing low profitability in recent years. Perform an analysis of...
DuPONT ANALYSIS A firm has been experiencing low profitability in recent years. Perform an analysis of the firm's financial position using the DuPont equation. The firm has no lease payments but has a $2 million sinking fund payment on its debt. The most recent industry average ratios and the firm's financial statements are as follows: Industry Average Ratios Current ratio 3.34x Fixed assets turnover 7.44x Debt-to-capital ratio 19.28% Total assets turnover 3.70x Times interest earned 35.45x Profit margin 12.64% EBITDA...
Managers monitor earnings per share (EPS) because Select one: A. retained earnings must be available for...
Managers monitor earnings per share (EPS) because Select one: A. retained earnings must be available for the payment of EPS. B. EPS is affected by dividends paid. C. investors use EPS as a basis in evaluating the firm's profitability. D. EPS should be used as a single broad measure of overall firm performance. . Mamantor Company had a debt to equity ratio of 0.600. The company received a loan. The effect of the transaction is Select one: A. the ratio...
reflect on which ratio category SNEAK should focus on, in terms of areas of improvement. how...
reflect on which ratio category SNEAK should focus on, in terms of
areas of improvement. how might they improve those ratios?
B SNEAK HERMES 1.36 0.64 1.44 0.87 47.97 5.47 1.75 28.18 10.12 1.75 3.02 68.11%% 2.15 42.15% 1 Financial Ratios Comparison 2 3 Liquidity Ratios 4 Current ratio 5 Quick Ratio 6 7 Asset Management Ratios 8 Days sales outstanding 9 Inventory turnover (sales/inventory) 10 Total asset turnover 11 12 Debt ratios 13 Times interest earned 14 Total debt...
A firm will pay a $2 dividend per share in one year and a liquidating dividend...
A firm will pay a $2 dividend per share in one year and a liquidating dividend of $50 per share in two years. The required return on the firm is 15%. An investor owns 1 share of the firm. The investor wants to receive equal cash flows in each of the next two years. Find the price of the firm's stock now and in one year, the dividend the investor wants in one year, and the number of shares the...
The current year's net earnings were $8,019,000 or $0.65 per diluted share, compared with $32,067,000 or $2.63 per dilu...
The current year's net earnings were $8,019,000 or $0.65 per diluted share, compared with $32,067,000 or $2.63 per diluted share, last year. These results reflect the Company's decision to implement the LIFO (last-in, first-out) inventory valuation method effective December 30, 2007 (fourth quarter). The effect of this change was to reduce annual pretax earnings by $28,165,000 and net earnings by $18,307,000 or $1.50 per share ($1.49 diluted) below that which would have been reported using the Company's previous inventory method....
Retained Earnings Policy Public enterprises are required to present earnings per share data on the income...
Retained Earnings Policy Public enterprises are required to present earnings per share data on the income statement. Consider the effect of dilutive and antidilutive convertible securities. Discuss this information from the perspective of a shareholder, and discuss what shareholders would expect to discern from this information. In your responses to your peers, discuss potential challenges that might arise from the presentation of this information and shareholders' interpretations. How should this information be communicated to shareholders?
In determining basic earnings per share, dividends on convertible cumulative preferred stock should be Select one:...
In determining basic earnings per share, dividends on convertible cumulative preferred stock should be Select one: O a. disregarded. O b. deducted from net income whether declared or not. O c. added back to net income whether declared or not. O d. deducted from net income only if declared.
DFB, Inc. expects earnings this year of $4.49 per share, and it plans to pay a...
DFB, Inc. expects earnings this year of $4.49 per share, and it plans to pay a $2.55 dividend to shareholders at that time (one year from now). DFB will retain $1.94 per share of its earnings to reinvest in new projects that have an expected return of 15.4% per year. Suppose DFB will maintain the same dividend payout rate, retention rate, and return on new investments in the future and will not change its number of outstanding shares. a. What...
Please answer the following questions thoroughly in your own words.(600 Words) Why is earnings per share called "the bottom line"? What is EBIT, or operating income? What is EBITDA? Which is more like a snapshot of the firm's operations-the balance sheet or the income statement? Explain your answer.
reflect on which ratio category SNEAK should focus on, in terms of
areas of improvement. how might they improve those ratios?
B SNEAK HERMES 1.36 0.64 1.44 0.87 47.97 5.47 1.75 28.18 10.12 1.75 3.02 68.11%% 2.15 42.15% 1 Financial Ratios Comparison 2 3 Liquidity Ratios 4 Current ratio 5 Quick Ratio 6 7 Asset Management Ratios 8 Days sales outstanding 9 Inventory turnover (sales/inventory) 10 Total asset turnover 11 12 Debt ratios 13 Times interest earned 14 Total debt...
A firm will pay a $2 dividend per share in one year and a liquidating dividend of $50 per share in two years. The required return on the firm is 15%. An investor owns 1 share of the firm. The investor wants to receive equal cash flows in each of the next two years. Find the price of the firm's stock now and in one year, the dividend the investor wants in one year, and the number of shares the...
The current year's net earnings were $8,019,000 or $0.65 per diluted share, compared with $32,067,000 or $2.63 per diluted share, last year. These results reflect the Company's decision to implement the LIFO (last-in, first-out) inventory valuation method effective December 30, 2007 (fourth quarter). The effect of this change was to reduce annual pretax earnings by $28,165,000 and net earnings by $18,307,000 or $1.50 per share ($1.49 diluted) below that which would have been reported using the Company's previous inventory method....
In determining basic earnings per share, dividends on convertible cumulative preferred stock should be Select one: O a. disregarded. O b. deducted from net income whether declared or not. O c. added back to net income whether declared or not. O d. deducted from net income only if declared.
DFB, Inc. expects earnings this year of $4.49 per share, and it plans to pay a $2.55 dividend to shareholders at that time (one year from now). DFB will retain $1.94 per share of its earnings to reinvest in new projects that have an expected return of 15.4% per year. Suppose DFB will maintain the same dividend payout rate, retention rate, and return on new investments in the future and will not change its number of outstanding shares. a. What...
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