Balance Sheets: 1. What is the firm’s 2018 price/earnings ratio? Round your answ

Question

Balance Sheets:

1. What is the firm’s 2018 price/earnings ratio? Round your answer to two decimal places.

2. Using the DuPont equation, what is the firm’s 2018 ROE? Round your answer to two decimal places.
%

  

Balance Sheets:

2018 2017 Cash and equivalents $110   $95   Accounts receivable 275   300   Inventories 375   350         Total current assets $760   $745   Net plant and equipment 2,000   1,490   Total assets $2,760   $2,235   Accounts payable $150   $85   Accruals 75   50   Notes payable 160   185         Total current liabilities $385   $320   Long-term debt 450   290   Common stock 1,225   1,225   Retained earnings 700   400   Total liabilities and equity $2,760   $2,235  

Explanation / Answer

Earnings per share = 228/100 = 2.28

Price to earnings = 22.50/2.28 = 9.87

Return on equity = 228//(1225 + 400)

return on equity = 14.03%

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