Percentage changes; p/e ratios and investors' expectations
Shown below are Gamma,Inc.'s earnings per share for a four-year period,along with the per-share market price of the company's stock at each year-end.The earnings in 2015 were the highest in the company's history. (a)Compute the percentage change in earnings per share in 2013,2014,and 2015.(Place your answers in the spaces provided above.)
(b)Compute the p/e ratio of stock at the end of each of the four years.(Place your answers in the spaces provided above.)
(c)What does the p/e ratio at the end of 2015 indicate about investors' expectations of earnings per share for the coming year? Explain your reasoning.

Question

Percentage changes; p/e ratios and investors' expectations
Shown below are Gamma,Inc.'s earnings per share for a four-year period,along with the per-share market price of the company's stock at each year-end.The earnings in 2015 were the highest in the company's history.  (a)Compute the percentage change in earnings per share in 2013,2014,and 2015.(Place your answers in the spaces provided above.)
(b)Compute the p/e ratio of stock at the end of each of the four years.(Place your answers in the spaces provided above.)
(c)What does the p/e ratio at the end of 2015 indicate about investors' expectations of earnings per share for the coming year? Explain your reasoning.

Quizplus · Accepted Answer

The Answer of Percentage changes; p/e ratios and investors' expectations
Shown below are Gamma,Inc.'s earnings per share for a four-year period,along with the per-share market price of the company's stock at each year-end.The earnings in 2015 were the highest in the company's history.  (a)Compute the percentage change in earnings per share in 2013,2014,and 2015.(Place your answers in the spaces provided above.)
(b)Compute the p/e ratio of stock at the end of each of the four years.(Place your answers in the spaces provided above.)
(c)What does the p/e ratio at the end of 2015 indicate about investors' expectations of earnings per share for the coming year? Explain your reasoning.

Percentage Changes; P/e Ratios and Investors' Expectations