Answered step by step
Verified Expert Solution
Question
1 Approved Answer
please answer all questions, thank you Financial Learning Systems has 3.3 million shares of common stock outstanding and 78,285 shares of preferred stock. (The preferred
please answer all questions, thank you
Financial Learning Systems has 3.3 million shares of common stock outstanding and 78,285 shares of preferred stock. (The preferred pays annual cash dividends of $4.39 a share, and the common pays annual cash dividends of 25 cents a share.) Last year, the company generated net profit (after taxes) of $6,869,104. The company's balance sheet shows total assets of $84 million, total liabilities of $38 million, and $5 million in preferred stock. The firm's common stock is currently trading in the market at $42.32 a share. a. Given the preceding information, find the EPS, P/E ratio, and book value per share. b. What will happen to the price of the stock if EPS rises to $3.01 and the P/E ratio stays where it is? What will happen if EPS drops to $1.13 and the P/E doesn't change? c. What will happen to the price of the stock if EPS rises to $3.01 and the P/E jumps to 30.8 times eamings? d. What will happen if both EPS and the P/E ratio drop-to $1.13 and 11.9 times earnings, respectively? e. Comment on the effect that EPS and the P/E ratio have on the market price of the stock 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