Wilson, Inc., has a current stock price of $46.00. For the past year, the company had net income of $6,800,000, total equity of $21,690,000, sales of $40,100,000, and 5.2 million shares of stock outstanding.1. What are eamings per share (EPS)? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g. 32.16.)
2. What is the price-eamings ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answers
Answer:
1. What are eamings per share (EPS)? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g. 32.16.)
Answer: $ 1.31 / share
2. What is the price-eamings ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Answer: 35.11
Explanation:
Earning Per Share (EPS) = Net Income - Preferred dividends / Outstanding Number of Share
Earning Per Share (EPS) = $6,800,000 - 0 / 5,200,000 shares
Earning Per Share (EPS) = $6,800,000 / 5,200,000 shares
Earning Per Share (EPS) = $1.31 / share
Price earning ratio = Share price / Earning per share
Price earning ratio = $46 per share / $1.31 per share
Price earning ratio = $46 / $1.31
Price earning ratio = 35.11
Related Questions
On July 1 of the current year, Marcia purchases a new home and borrows $320,000. Marcia is required to pay two points on the loan. The loan is secured by the residence and the charging of points is an established business practice in the area. The term of the loan is 20 years, beginning on July 1 of the current year. How much, if any, of the points may Marcia deduct in the current year?
Which of the following statements is CORRECT? The time to maturity does not affect the change in the value of a bond in response to a given change in interest rates. You hold two bonds. One is a 10-year, zero coupon, bond and the other is a 10-year bond that pays a 6% annual coupon. The same market rate, 6%, applies to both bonds. If the market rate rises from the current level, the zero coupon bond will experience the smaller percentage decline. The shorter the time to maturity, the greater the change in the value of a bond in response to a given change in interest rates, other things held constant. The longer the time to maturity, the smaller the change in the value of a bond in response to a given change in interest rates. You hold two bonds, a 10-year, zero coupon, issue and a 10-year bond that pays a 6% annual coupon. The same market rate, 6%, applies to both bonds. If the market rate rises from its current level, the zero coupon bond will experience the larger percentage decline.
With regard to a futures contract, the long position is held by a. the trader who plans to hold the contract open for the lengthiest time period. b. the trader who commits to delivering the commodity on the delivery date. c. the trader who bought the contract at the largest discount. d. the trader who has to travel the farthest distance to deliver the commodity. e. the trader who commits to purchasing the commodity on the delivery date.
SCHMIDT MACHINERY COMPANY Standard Cost Sheet Product: XV-1 Descriptions Quantity Cost Rate Subtotal Total Direct materials Aluminum 4 pounds $25/pound $100 PVC 1 pound 40/pound 40 Direct labor 5 hours 40/hour 200Variable factory overhead 5 hours 12/hour 60Total variable manufacturing cost $400Fixed factory overhead 5 hours 24/hour 120 120Standard manufacturing cost per unit $520Standard variable selling and administrative cost per unit I pound 50 * Budgeted fixed factory overhead cost = $120,000 Assume that Schmidt Machinery Company had the standard costs reflected in Exhibit 14.5. In a given month, the company used 3,470 pounds of aluminum to manufacture 935 units. The company paid $28.90 per pound during the month to purchase aluminum. At the beginning of the month, the company had 54 pounds of aluminum on hand. At the end of the month, the company had only 34 pounds of aluminum in its warehouse. Schmidt used 4,400 direct labor hours during the month, at an average cost of $41.90 per hour. Required: Compute for the month the following variances: 1. The purchase-price variance for aluminum. Indicate whether this variance is favorable (F) or unfavorable (U). 2. The usage variance for aluminum. Indicate whether this variance is favorable (F) or unfavorable (U). 3. The direct labor rate variance. Indicate whether this variance is favorable (F) or unfavorable (U). 4. The direct labor efficiency variance. Indicate whether this variance is favorable (F) or unfavorable (U).
Answers
Answer:
Given this change in the cost, the adequacy and quality of the estimated cost drivers and costs used by the system will determine the costing results for SR6 under the new system.
Explanation:
A cost driver can be described as the unit of an activity or any factor that makes the cost of an activity to fluctuate. An estimated cost driver is adequate and of the expected quality when quality or quantity is satisfactory or acceptable.
Therefore, given this change in the cost, the adequacy and quality of the estimated cost drivers and costs used by the system will determine the costing results for SR6 under the new system.
Final answer:
Cannady has transitioned from a traditional to an Activity-Based Costing system, which uses three cost drivers. As a result, the cost of manufacturing SR6 rose from $168 to $178 per unit due to the more accurately distributed costs.
Explanation:
In this context, Cannady's move from a traditional cost system using a single cost driver to an Activity-Based Costing (ABC) system that uses three cost drivers resulted in a change in the unit cost of their SR6 product. The new price reflects a more accurate calculation of the costs incurred in producing SR6.
In a traditional cost system, overhead costs are simply divided by the total number of units produced using one cost driver. With the ABC system, costs are allocated based on the actual activities that consume resources, making the costs more accurate. Therefore, the unit cost of SR6 increased from $168.00 to $178.00 under the new system as the costs were more accurately allocated under the ABC system.
Learn more about Activity-based costing here:
#SPJ3
Answers
Answer:
raw material inventory turnover = 4.42
number of days sale in raw materials inventory = 21.97
Explanation:
given data
beginning inventory = $930 million
ending inventory = $880 million
purchased raw materials = $3,956 million
used raw materials = $4,006 million
solution
we get here first raw material inventory for turnover that is
raw material inventory turnover = ..............1
here average raw material inventory =
average raw material inventory = $905 million
so from equation 1
raw material inventory turnover =
raw material inventory turnover = 4.42
and
now number of days' sales in raw materials inventory will be as
number of days sale in raw materials inventory = × 365 .............2
put here value
number of days sale in raw materials inventory = × 365
number of days sale in raw materials inventory = 21.97
Answers
Answer: Problem detection
Explanation: Problem detection is used in R&D, it is a techniques that asks consumers who are familiar with the product or service to ponder upon an exhaustive list of things that bothers them while using the product.
This is done to find the ideas to make creative strategies and improvements in product/service.
Problem Detection approach identifies and prioritizes the most pressing consumer concerns so that the brand they are associated with can address unmet needs that exist in the marketplace.
During the period, customer balances are written off in the amount of $10,000.
At the end of the period, bad debt expense is estimated to be $8,000.
Answers
Answer: Please see the analysis below
Explanation: The following are the financial statement effects
Assets Liabilities Stockholders Equity Income Expense
Write-off of $10,000 - - Nil Nil Nil
Bad debt of $8,000 - + - - +
- Write-off of customer balances of $10,000 would lead to reduction in assets and also reduction in liabilities (since the provision for doubtful accounts reports to liabilities but mapped to the accounts receivable to show the net amount). Here, we have assumed that there is an existing allowance for doubtful accounts that has $10,000 buffer or more. If the write-off was not initially provided for, it would hit expense by debiting bad debt expense and crediting the accounts receivable. Its effects are therefore decrease in asset, decrease in liabilities.
- Bad debt expense of $8,000 affects the expense and the liabilities/assets. Journal entries to record the bad debt expense is Debit Bad debt expense $8,000; Credit Allowance for doubtful accounts $8,000. So, it affects the expense, liabilities and ultimately the assets (allowance for doubtful accounts is a contra to the accounts receivable). Its effects are increase in expense, increase in liabilities, decrease in stockholders equity, decrease in income and decrease in assets
Answer:
Assets =Liabilities + Stockholders Equity
-8000= - 8000
Explanation:
Allowance for Doubtful Debts $10,000
Bad debt expense $8,000
Assets =Liabilities + Stockholders Equity
-8000= - 8000
The write off does not affect the realizable value of accounts receivable. Neither total assets nor net income is affected by the write off a specific account.Instead both assets and net income are affected in the period when bad debts expense is predicted and recorded with an adjusting entry.
WACC Estimation
The table below gives the balance sheet for Travellers Inn Inc. (TII), a company that was formed by merging a number of regional motel chains.
Travellers Inn: December 31, 2012 (Millions of Dollars)
Cash $10 Accounts payable $10
Accounts receivable 20 Accruals 10
Inventories 20 Short-term debt 5
Current assets $50 Current liabilities $25
Net fixed assets 50 Long-term debt 30
Preferred stock 5
Common equity
Common stock $10
Retained earnings 30
Total common equity $40
Total assets $100 Total liabilities and equity $100
The following facts also apply to TII:
1. Short-term debt consists of bank loans that currently cost 8%, with interest payable quarterly. These loans are used to finance receivables and inventories on a seasonal basis, bank loans are zero in the off-season.
2. The long-term debt consists of 30-year, semiannual payment mortgage bonds with a coupon rate of 8%. Currently, these bonds provide a yield to investors of rd= 12%. If new bonds were sold, they would have a 12% yield to maturity.
3. TII's perpetual preferred stock has a $100 par value, pays a quarterly dividend of $2.50, and has a yield to investors of 11%. New perpetual preferred would have to provide the same yield to investors, and the company would incur a 3% flotation cost to sell it.
4. The company has 4 million shares of common stock outstanding. P0 = $20, but the stock has recently traded in price the range from $17 to $23. D0 = $1 and EPS0 = $2. ROE based on average equity was 26% in 2008, but management expects to increase this return on equity to 31%; however, security analysts and investors generally are not aware of management's optimism in this regard.
5. Betas, as reported by security analysts, range from 1.3 to 1.7; the T-bond rate is 10%; and RPM is estimated by various brokerage houses to be in the range from 4.5% to 5.5%. Some brokerage house analysts reports forecast dividend growth rates in the range of 10% to 15% over the foreseeable future.
6. TII's financial vice president recently polled some pension fund investment managers who hold TII's securities regarding what minimum rate of return on TII's common would make them willing to buy the common rather than TII bonds, given that the bonds yielded 12%. The responses suggested a risk premium over TII bonds of 4 to 6 percentage points.
7. TII is in the 35% federal-plus-state tax bracket.
8. TII's principal investment banker predicts a decline in interest rates, with rd falling to 10% and the T-bond rate to 6%, although the bank acknowledges that an increase in the expected inflation rate could lead to an increase rather than a decrease in interest rates.
Assume that you were recently hired by TII as a financial analyst and that your boss, the treasurer, has asked you to estimate the company's WACC under the assumption that no new equity will be issued. Your cost of capital should be appropriate for use in evaluating projects that are in the same risk class as the assets TII now operates. Do not round intermediate steps. Round your answer to two decimal places.
%
NOTE:
Wrong Answers:
14.29% & 14.76% --> Please someone give me right answer, I am posting same question 4th time; please dont post spam.
--> It's Problem 9-17 of mangerial finance course WACC Estimation problem; required to consider above table with given 8 assumption to get WACC value; it will be only one answer liike 15.12%; 17.32%.....
Answers
Answer:
Explanation:
(1) Cost of short-term debt after tax : 8% ( 1 – tax rate)
= 8% ( 1 – 35%)
= 8% (65%)
= 5.2%
Market value of Short term debt ( in million $) = 5
(2) Cost of long-term debt after tax: 8% ( 1 – tax rate)
= 8% ( 1 – 35%)
= 8% (65%)
= 5.2%
Market value of long term debt ( in $ million) = ( par value of Debt * coupon rate) / Yield
= (30 * 8%) / 12%
= 2.4 / 12%
= 20
(3) Market price of preferred stock = annual Dividend / Yield to investor
= ($2.50*4) / 0.11
= $ 10 / 0.11
= $ 90.909
Cost of new preferred stock = Annual dividend / Current market price – floatation cost
= ($2.50*4) / $ 90.909 – ( 3% * $ 90.909)
= $ 10 / $ 90.909 – $ 2.727
= $ 10 / $ 88.182
= 0.1134
= 11.34%
Market value of Preferred stock ($ millions) = Par value of Preferred * Annual Dividend rate / Yield
= 5 * ( $ 10 / $ 100) / 0.11
= 5 * 0.1 / 0.11
= 0.5 / 0.11
= 4.545454
(4) Market value of Common stock ($ millions) = No of common stock outstanding * Current market price
= 4 * 20
= 80
Retention ratio = (1 – dividend pay-out ratio)
= (1 – $1 / $ 2)
= (1 – 0.5)
= 0.5
= 50%
Growth rate = return on equity * retention ratio
= 26% * 0.5
= 13%
Cost of common stock (Alternative 1) = (Dividend for next year / Current market price) + growth rate
= [1 ( 1+ 0.13) / 20 ] + 13%
= [1 ( 1.13) / 20 ] + 13%
= [1.13 / 20 ] + 13%
= 5.65% + 13%
= 18.65%
Cost of common stock (alternative 2) = Risk free rate + Beta (Market risk premium)
= 10% + [(1.3 + 1.7)/2] [(4.5% + 5.5%) /2]
= 10% + [(1.3 + 1.7)/2] [(4.5% + 5.5%) /2]
= 10% + (1.5)( 5%)
=10% + 7.5%
= 17.5%
Cost of Common stock (Alternative 3) = Yield on TII Bond + Average Risk premium
= 12% + (4% + 6%) / 2
= 12% + (10%) / 2
= 12% + 5%
= 17%
Cost of common stock = Highest of Alternative 1, Alternative 2 & Alternative 3
= Highest of (18.65%, 17.5% and 17%)
= 18.65%
Answer : Weighted Average cost of capital (WACC) of Company is 15.28% (take a look to the document attached)
Answers
Answer:
The total equivalent units of production for direct materials is 74000 Units.
Explanation:
materials required for production are added at the beginning of the process. So whatever the Total amount of materials required for 74000 Tons as been added at beginning of the Production (in July). For the Purpose of materials we need to consider 100% Completed.
total Equalent Units = Total Units Started
= 74000 Units
Therefore, The total equivalent units of production for direct materials is 74000 Units.