Phelps, Inc., had assets of $67,646 and liabilities of $15,466 at the close of 2

Question

Phelps, Inc., had assets of $67,646 and liabilities of $15,466 at the close of 2013 with 10,718 shares of outstanding common stock. Net income for 2013 was $7,829. At the end of 2014, assets were $79,571, liabilities were $18,551, and the company had 10,771 shares of outstanding stock trading at a price of $10 per share. Net income for 2014 was $9,993. a. Calculate EPS for 2014. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Calculate ROE for 2014 Calculate the Price/Earnings Ratio for 2014

Explanation / Answer

EPS = Net income / Number of shares

For 2014 EPS = 9993 / 10771 = .93

ROE = Net income/ shareholders equity = 9993 / 61020 * 100 = 16.38%

# Shareholders equity = Total assets - liabilities = 79571 - 18551 = $61020

Price earnings ratio = Price / EPS = 10 / .93 = 10.75

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