Calculate and analyze ratios (LOlO-8) The financial statements of Friendly Fashi

Question

Calculate and analyze ratios (LOlO-8) The financial statements of Friendly Fashions include the following selected data: required Calculate the return on equity in 2015. Compare it with the amount calculated for Deckers Outdoor and Wolverine in the chapter. Calculate the return on the market value of equity in 2015. Compare it with the amount calculated for Deckers Outdoor and Wolverine in the chapter Calculate earnings per share in 2010. Why is it not reasonable to compare it with the earnings per share for Deckers Outdoor and Wolverine? 3. Calculate the pnee-eamings ratio in 2010. Compare it with the amount calculated for Deckers Outdoor and Wolverine in the chapter. Calculate and analyze ratios (LOIO-8) Financial information for Forever 18 includes the following selected data (in millions): Calculating earnig per share in 2014 and 2015. Did earning per share increase in 2015? Calculate the price- earning ratio in 2014 and 2015. In which year is the stock priced lo

Explanation / Answer

We Summarize as follows for year 2015 of friendly fashion

1) Return on equity is the amount which shareholders has earned on their investment in company . It is calculated using the formula - Net income / shareholders equity Net Income = 805 Million Shareholder equity = 1476 Million Return on equity = 805/1476, = 0.55 2) Return on market value of equity checks return in comparison to market price of stocks we are given market price as $ 29.24 Average number of shares outstanding = 296 Million Market Value of equity = Number of shares x Market Price = 296 Million x 29.24 , = 8655.04 Million Return on Market Value is calculated as = Net Income / Market Value of equity = 805 / 8655.04, = 0.09

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