Ask Question
4 February, 01:37

Financial information for Forever 18 includes the following selected dа ta: ($ in millions except share data) 2021 2020 Net income $ 182 $ 164 Dividends on preferred stock $ 34 $ 25 Average shares outstanding (in millions) 200 200 Stock price $ 11.27 $ 10.22 2-a. Calculate the price-earnings ratio in 2020 and 2021.

+3
Answers (1)
  1. 4 February, 03:48
    0
    P/E ratio in 2020 is 14.7

    P/E ratio in 2021 is 15.23

    Explanation:

    Price-earning (P/E) ratio = Price per Share / Earning per Share

    The earning after dividends on preferred stock in 2021 is $148 = Net income $182 - Dividends on preferred stock $34

    Then earning per share in 2021 is $0.74 = $148 / 200

    P/E ratio in 2021 is 15.23 = $11.27/$0.74

    Repeat calculation for 2020, then:

    The earning after dividends on preferred stock in 2020 is $139 = Net income $164 - Dividends on preferred stock $25

    Then earning per share in 2021 is $0.695 = $139 / 200

    P/E ratio in 2020 is 14.7 = $10.22/$0.695
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Financial information for Forever 18 includes the following selected dа ta: ($ in millions except share data) 2021 2020 Net income $ ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers