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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883

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BuyFindarrow_forward

Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883
Textbook Problem

Debt and price-earnings ratios
The Home Depot. Inc. (HD) operates over 2.200 home improvement retail stores and is a competitor of Lowe's (LOW).
The following data (in millions) were adapted from recent financial statements of The Home Depot.

With a market price of $75.09, compute the price-earnings ratio for Year 1.

To determine

Concept Introduction:

Price Earnings Ratio:

The price earnings ratio shows the relationship between price of the share and earnings per share. It is calculated with the help of following formula:

  Price Earnings Ratio=Market price per shareEarnings per share

To Calculate:

The Price Earnings ratio for year 1

Explanation

The Price Earnings ratio for year 1 is calculated as follows:

  Price Earnings Ratio=Market&#

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