Business, 30.10.2020 17:30 miyah5316

Compute Topp Company’s price-earnings ratio if its common stock has a market value of $29.04 per share and its EPS is $4.80. Considering Lower deck, its key competitor, has a PE ratio of 9.5, which company does the market have higher expectations of future performance?

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Since the Lower deck's price-earnings ratio of 9.5 is higher than Topp Company’s price-earnings ratio of 6.05, the market therefore have higher expectations of future performance of Lower deck.

Explanation:

Price-earnings ratio refers to the ratio of the market price per share (MPS) to the earning per share (EPS) of a company.

Topp Company’s price-earnings ratio can therefore, be computed using the following formula:

Topp Company’s price-earnings ratio = MPS / EPS (1)

Where;

MPS = Common stock market value = $29.04

EPS = $4.80

Substituting into equation (1), we have:

Topp Company’s price-earnings ratio = $29.04 / $4.80 = 6.05

It should be noted that companies that have a high Price Earnings Ratio are usually referred as growth stocks. The implication of this is that there is a positive future performance which makes investors to have higher expectations for future earnings growth. As a result, the investors are ready to pay more for the stock of the firms.

Since the Lower deck's price-earnings ratio of 9.5 is higher than Topp Company’s price-earnings ratio of 6.05, the market therefore have higher expectations of future performance of Lower deck.

Answer from: Quest

1 all nations face the problem of scarcity because there are limited resources and unlimited wants. nations do not have enough factors of production to produce everything that their population wants. entrepreneurial resources initiate businesses to make new goods and services; labor resources produce goods and services.

2 there are four factors of production: natural resources, labor resources, capital resources, and entrepreneurial resources. natural resources are raw materials from nature that are used to produce goods. trees, water, and grains are natural resources. some natural resources, such as wheat and cattle, are renewable

3 wants

things that you do not need to have in order to survive, but would like to have

needs

things that you must have in order to survive

goods

physical products

services

tasks that a business perform for customers

resources

items that people can use to make or obtain what they need or want

determine

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4 i really dont know

Answer from: Quest

Secure hope this

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