Phelps, Inc. had assets of $74,410, liabilities of $16,702, and 11,542 shares of
ID: 2437764 • Letter: P
Question
Phelps, Inc. had assets of $74,410, liabilities of $16,702, and 11,542 shares of outstanding common stock at December 31, 2017. Net income for 2017 was $8,541. The company had assets of $87,487, liabilities of $20,035, 11,023 shares of outstanding common stock, and its stock was trading at a price of $10 per share at December 31,2018. Net income for 2018 was $10,235. Required a. Calculate EPS for 2018 b. Calculate ROE for 2018 c. Calculate the Price/Earnings Ratio for 2018. Complete this question by entering your answers in the tabs below.Explanation / Answer
Req 1: Net income for 2018: 10235 Average number of shares: 11283 (11542+11023)/2 EPS: 0.91 (Net income /Average Shares) Req 2: ROE: Beginning balance of Equity (74410-16702): 57708 Ending Balance of Equity (87487-20035) 67452 Average equity 62580 Net income for the year 10235 Divide: Average Equity balance 62580 Return on equity 16.36% Req 3: Market price of shares 10 Divide: EPS 0.91 Price earning ratio 10.99
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