Hello,

I am working on: earnings per share, and earnings per ratio. I have completed the following question, and would like my work to be checked for accuracy.


NET SALES 816,163 (2001), 837,627 (2000)
NET INCOME 58,375 (2001) 80,999 (2000)
TOTAL ASSETS 647,602 (2001) 630,934 (2000)


SHARE INFORMATION

Shares outstanding at year end 66,990,484 (2001) 68,843,722 (2000)
Year-end stock price per share 19.15 (2001) 18.63 (2000)
Preferred dividends 0 0


THERE WERE 71,002,196 SHARES OUTSTANDING AT THE END OF 1999.




completed question:

(A) Earnings per share 2001 2000
58375
66990484= 1147.59 80,999
68843722+71002196/2= 863.26
69922959

(B) Price-Earnings Ratio 2001 2000
19.15/1147.59= 59.93 18.63/863.26=46.34


Please let me know if this is correct!

Quote:

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(A) Earnings per share 2001 2000
58375
66990484= 1147.59 80,999
68843722+71002196/2= 863.26
69922959

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I don't understand what you're doing here. First, if you're trying to make columns, they don't work, so I'm not sure what numbers are supposed to be where. And it looks like you've averaged common shares for one year but not the other. And 58375/66990484 doesn't = 1147.59. Your numerator is smaller and that cannot equal a number like that. You've divided backwards.

However, another problem is that I think the net income is perhaps in thousands, because the numbers are coming out very funny when I do it. If this came off a real company's statements, it's common for them to put the financial statements in thousand or even millions, but still put the shares in... er, ones? (i.e. normally) You need to be sure to look at that.

Quote:

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(B) Price-Earnings Ratio 2001 2000
19.15/1147.59= 59.93 18.63/863.26=46.34

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This isn't going to be correct when EPS isn't correct.

And again, 19.15/1147.59 doesn't equal 59.93. That doesn't even make any sense. If you had $10 and had to divide it among 100 people, can each person get something bigger than $10? I think you are trying to divide 19.15 INTO 1147.59 (like long division) and that can't be done on a calculator. You have to divide 19.15 BY 1147.59.