Treynor Pie Company is a food company specializing in high-calorie snack foods. It is seeking to diversify its food business and lower ts risks. It is examining three companies-a gourmet restaurant chain, a baby food company, and a nutritional products firm. Each of these companies can be bought at the same multiple of earnings. The following represents information about all the companies. Correlation with Standard Deviation Treynor Pie Company + 1.0 + 0.6 + 0.3 - 0.7 in Earnings ($ millions) $ 4.0 1.3 Expected Earnings ($ millions) $ 9 Sales ($ millions) $ 197 Company Treynor Pie Company Gourmet restaurant Baby food company Nutritional products company 64 4 54 2 1.8 75 3 3.2 a-1. Compute the coefficient of variation for each of the four companies. (Enter your answers in millions (e.g., $100,000 should be entered as "10"). Round your answers to 3 decimal places.) Coefficient of Variation Treynor Pie Company Gourmet restaurant Baby food company Nutritional products company a-2. Which company is the least risky?
Treynor Pie Company is a food company specializing in high-calorie snack foods. It is seeking to diversify its food business and lower ts risks. It is examining three companies-a gourmet restaurant chain, a baby food company, and a nutritional products firm. Each of these companies can be bought at the same multiple of earnings. The following represents information about all the companies. Correlation with Standard Deviation Treynor Pie Company + 1.0 + 0.6 + 0.3 - 0.7 in Earnings ($ millions) $ 4.0 1.3 Expected Earnings ($ millions) $ 9 Sales ($ millions) $ 197 Company Treynor Pie Company Gourmet restaurant Baby food company Nutritional products company 64 4 54 2 1.8 75 3 3.2 a-1. Compute the coefficient of variation for each of the four companies. (Enter your answers in millions (e.g., $100,000 should be entered as "10"). Round your answers to 3 decimal places.) Coefficient of Variation Treynor Pie Company Gourmet restaurant Baby food company Nutritional products company a-2. Which company is the least risky?
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter4: Profitability Analysis
Section: Chapter Questions
Problem 1BAIC
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