Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Understanding Earnings per Share and Stock Prices. The Following is an excerpt from an earnings release of Apple Inc., the maker of iMac, iPod, iPad

Understanding Earnings per Share and Stock Prices.

The Following is an excerpt from an earnings release of Apple Inc., the maker of iMac, iPod, iPad and iPhone products, related to the results of its operations for the first quarter of fiscal year 2016.

CUPERTINO, California January 26, 2016 Apple today announced financial results for its fiscal 2016 first quarter ended December 26, 2015. The Company posted record quarterly revenue of $75.9 billion and record quarterly net income of $18.4 billion, or $3.28 per diluted share. These results compare to revenue of $74.6 billion and net income of $18 billion, or $3.06 per diluted share, in the year-ago quarter. Gross margin was 40.1 percent compared to 39.9 percent in the year-ago quarter. International sales accounted for 66 percent of the quarters revenue.

Despite the increase in Apple's revenues and earnings over the same quarter of the prevoiusyear, its shares fell from US$97.34 on January 29, 2016, to US$96.43 on February 1, 2016.

Required:

Explain why the price per share decreased even though the company announced an increase in its earnings per share.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Internal Quality Auditing

Authors: Denis Pronovost

1st Edition

0873894766, 9780873894760

More Books

Students also viewed these Accounting questions

Question

demonstrate the importance of induction training.

Answered: 1 week ago