a.
To calculate: The EPS and P/E ratio for Walker Machine Tools before the sale of new shares via rights offering.
Introduction:
Earnings per share (EPS):
It is the profit per outstanding share of a public company. A higher EPS indicates a higher value of the company because investors are ready to pay a higher price for one share of the company.Â
P/E ratio:
It is evaluated by dividing the current share price by EPS of a company. It helps in valuing the present as well as future profitability of a company.
b.
To calculate: The EPS and P/E ratio of Walker Machine Tools after the offering of rights.
Introduction:
Earnings per share (EPS):
It is the profit per outstanding share of a public company. A higher EPS indicates a higher value of the company because investors are ready to pay a higher price for one share of the company.Â
P/E ratio:
It is evaluated by dividing the current share price by EPS of a company. It helps in valuing the present as well as future profitability of a company.
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