FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Ferrell Inc. recently reported net income of $8 million. It has 720,000 shares of common stock, which currently trades at $55 a share. Ferrell continues to expand and anticipates that 1 year from now, its net income will be $12.8 million. Over the next year, it also anticipates issuing an additional 252,000 shares of stock so that 1 year from now it will have 972,000 shares of common stock. Assuming Ferrell's price/earnings ratio remains at its current level, what will be its stock price 1 year from now? Do not round intermediate calculations. Round your answer to the nearest cent
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What is price earning ratio?
The price-earnings ratio, also known as P/E ratio, is the ratio of a company's share price to the company's earnings per share.
So, Formula for P/E ratio=
Share price =P/E ratio * Earning per share
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