Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN: 9781285190907
Author: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher: Cengage Learning
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Chapter 4, Problem 11QE
Phillips-Van Heusen, an apparel manufacturer, reported net income (amounts in thousands) for Year 4 of $58,615 on sales of $1,460,235. It declared preferred dividends of $21,122. Preferred shareholders’ equity totaled $264,746 at both the beginning and end of Year 4. Common shareholders’ equity totaled $296,157 at the beginning of Year 4 and $364,026 at the end of Year 4. Phillips-Van Heusen had no noncontrolling interest in its equity. Total assets were $1,439,283 at the beginning of Year 4 and $1,549,582 at the end of Year 4. Compute the rate of ROCE for Year 4 and disaggregate it into profit margin for ROCE, assets turnover, and capital structure leverage ratio components.
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anapparel manufacturer, reported net income (amounts in thousands) for Year 4 of $58,615 onsales of $1,460,235. It declared preferred dividends of $21,122. Preferred shareholders’ equitytotaled $264,746 at both the beginning and end of Year 4. Common shareholders’ equitytotaled $296,157 at the beginning of Year 4 and $364,026 at the end of Year 4. Phillips-VanHeusen had no noncontrolling interest in its equity. Total assets were $1,439,283 at the beginningof Year 4 and $1,549,582 at the end of Year 4. Compute the rate of ROCE for Year 4 anddisaggregate it into profit margin for ROCE, assets turnover, and capital structure leverage ratiocomponents.
Lake Incorporated and River Incorporated reported net incomes of $275,000 and $231,000, respectively, for the most recent fiscal
year. Both companies had 55,000 shares of common stock issued and outstanding. The market price per share of Lake's stock was
$58, while River's sold for $62 per share.
Required
a. Determine the P/E ratio for each company.
b. Based on the P/E ratios computed in Requirement a, which company do investors believe has the greater potential for growth in
income?
Complete this question by entering your answers in the tabs below.
Required A Required B
Determine the P/E ratio for each company.
Note: Do not round intermediate calculations. Round your answers to the nearest whole number.
Company
Lake, Incorporated
River, Incorporated
P/E Ratio
Corral Limited, a publicly traded company, reported profit of $249,750 on its October 31 year-end income statement. The shareholders' equity section of its balance sheet reported 3,000, $2 noncumulative preferred shares and 50,000 common shares. At the beginning of the fiscal year, 40,000 had been issued,15,000 more were issued on March 1, and 5,000 were repurchased on August 1. The preferred dividend was declared and paid during the year. The market price per share on October 31 was $40.
(a) Calculate weighted average
(b) Calculate Corral's earnings per share.
(c) Calculate Corral's price-earnings ratio.
Chapter 4 Solutions
Financial Reporting, Financial Statement Analysis and Valuation
Ch. 4 - Common-Size Analysis. Common-size analysis is a...Ch. 4 - Earnings per Share. Firm A reports an increase in...Ch. 4 - Prob. 3QECh. 4 - Profit Margin for ROA versus ROCE. Describe the...Ch. 4 - Concept and Measurement of Financial Leverage....Ch. 4 - Advantages of Financial Leverage. A company...Ch. 4 - Prob. 7QECh. 4 - Nucor, a steel manufacturer, reported net income...Ch. 4 - Phillips-Van Heusen, an apparel manufacturer,...Ch. 4 - TJX, Inc., an apparel retailer, reported net...
Ch. 4 - Boston Scientific, a medical device manufacturer,...Ch. 4 - Valero Energy, a petroleum company, reported net...Ch. 4 - Exhibit 4.22 presents selected operating data for...Ch. 4 - Microsoft Corporation (Microsoft) and Oracle...Ch. 4 - Prob. 17PCCh. 4 - Prob. 18PCCh. 4 - Texas Instruments (TI) designs and manufactures...Ch. 4 - JCPenney operates a chain of retail department...Ch. 4 - Prob. 21PCCh. 4 - Selected data for General Mills for 2007, 2008,...Ch. 4 - Prob. 23PCCh. 4 - Hasbro is a leading firm in the toy, game, and...Ch. 4 - Fitch sells casual apparel and personal care...Ch. 4 - Prob. 26PCCh. 4 - Starwood Hotels (Starwood) owns and operates many...Ch. 4 - Select data for Avis and Hertz for 2012 follow....Ch. 4 - Integrative Case 1.1 introduced the industry...Ch. 4 - Prob. 1ABICCh. 4 - Prob. 1ACICCh. 4 - Prob. 1BAICCh. 4 - Prob. 1BBICCh. 4 - Walmart and Carrefour follow similar strategies....Ch. 4 - Walmart and Carrefour follow similar strategies....
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