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Normal Stock Rates

 Average Stock Prices Essay

The average stock prices for each in the four years shown in Exhibit you were the following:

1998111/4 = 27. seventy five

1999163/4 = 40. 75

2000281/2 sama dengan 140. 5

200191/2 = 45. a few

a. figure out the price/earnings ratio for each and every year. That may be, take the stock price shown above and divide by simply net income every common stock-dilution from display 1 . 2001 (3, 417)/$ 0. twenty seven = 12, 655. 5

2000 (3, 379)/$0. fifty five = 6th, 143. 63

1999 (3, 282)/$ zero. 31 = 10, 587. 09

1998 (3, 180)/$ 0. twenty-four = 13, 250. 00

b. Why do you think PRICE TO EARNINGS has changed from the 2000 to its 2001 level? ( Earnings every share in Chapt. 2)

The PRICE TO EARNINGS has changed by 2000 in 6, 143. 63 to 2001 for 12, 655. 50 since the net income every common stock-dilution has dropped in price. In 2000 it absolutely was $0. fifty five per common stock to $0. twenty seven in 2001. The price lowered $0. twenty eight over a season period. Likewise there is a major change the typical stock rates for 2k to 2001. The stocks and options were 281/2 in 2000 to 91/2 in 2001, this leading to a huge decrease in value. several. The book values per share for the same four years discussed inside the preceding question were: a. Compute the ratio of price to book value for each year.

P/B sama dengan Share Cost / Book Value every Share

Share PriceBook Benefit per Discuss

1998 $1. 18$ 0. 24/$1. 18=$0. 20

99 $ 1 . 55$ 0. 31/$1. 55=$0. 20

2150 $2. 29$0. 55/$2. 29=$0. 24

2001 $ 3. 26$ 0. 27/$3. 26=$0. 08

w. Is there any dramatic change in the ratio worthy of note?

Yes, the book benefit per discuss was at it is highest in 2000 in $0. twenty four and considerably dropped in 2001 by $0. '08 book benefit per talk about. The lower the book benefit per reveal is, the better the significance. This is proven in the previous problem.

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