As of February 2008, you are researching Jonash International, a hypothetical company subject to cyclical demand for

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As of February 2008, you are researching Jonash International, a hypothetical company subject to cyclical demand for its services. Jonash shares closed at $ 57.98 on 2 February 2007.

You believe the 2003 – 2006 period reasonably captures average profitability:

2007 2003 Measure 2006 2005 2004 E$3.03 $1.45 $0.23 $2.13 $2.55 EPS share $16.21 per E$19.20 $14.52 $13.17 $11.84 BV E16

A. Define normalized EPS.

B. Calculate a normalized EPS for Jonash based on the method of historical average EPS and then calculate the P/E based on normalized EPS.

C. Calculate a normalized EPS for Jonash based on the method of average ROE and the P/E based on normalized EPS.

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Equity Asset Valuation

ISBN: 978-0470571439

2nd Edition

Authors: Jerald E. Pinto, Elaine Henry, Thomas R. Robinson, John D. Stowe, Abby Cohen

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