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Financial And Managerial Accounting

15th Edition
WARREN + 1 other
ISBN: 9781337902663

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BuyFindarrow_forward

Financial And Managerial Accounting

15th Edition
WARREN + 1 other
ISBN: 9781337902663
Textbook Problem

The Kroger Company (KR), a grocery store chain, recently had a price-earnings ratio of 13.7, while the average price-earnings ratio in the grocery store industry was 22.5. What might explain this difference?

To determine

Identify the cause for the difference between the industry’s price earnings ratio and Company KR’s price earnings ratio.

Explanation

Price/earnings ratio: Price/earnings ratios are used to determine the profitability of a company. This ratio is abbreviated as P/E.

Price/earnings ratio= Market price per share of common stockE

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