Question
Global Corp. initially projected the 2019 income statement shown in the table LOADING... . Suppose that in 2019, Global launched an aggressive marketing campaign that
Global Corp. initially projected the 2019 income statement shown in the table LOADING... . Suppose that in 2019, Global launched an aggressive marketing campaign that boosted 2019 sales further by 14.6%. However, their operating margin fell from 6.26% to 3.87% Suppose that they had no other income, interest expenses were unchanged, and taxes were the same percentage of pretax income (26%) as in 2018. a. What was Global's EBIT in 2019? b. What was Global's income in 2019? c. If Global's P/E ratio (18.0) and number of shares outstanding (3.6 million) remained unchanged, what was Global's share price in 2019?
GLOBAL CORPORATION Income Statement Year ended December 31 (in $ millions) | ||
2019 | 2018 | |
Net sales | 186.7 | 176.1 |
Cost of sales | -152.1 | -147.3 |
Gross profit | 34.6 | 28.8 |
Selling, general, and administrative expenses | -13.5 | -13 |
Research and development | -8.2 | -7.6 |
Depreciation and amortization | -1.2 | -1.1 |
Operating income | 11.7 | 7.1 |
Other income | 0 | 0 |
Earnings before interest and taxes (EBIT) | 11.7 | 7.1 |
Interest income (expense) | -7.7 | -4.6 |
Pretax income | 4 | 2.5 |
Taxes | -1 | -0.6 |
Net income | 3 | 1.9 |
Earnings per share: Diluted earnings per share: | $0.83 $0.80 | $0.53 $0.50 |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started