common stock Phelps Inc had assets of 108230 liabilities of

common stock Phelps, Inc. had assets of $108,230, liabilities of $22,882, and 15,882 shares of at December 31, 2015. Net income for 2015 was $11,590. The company had assets of $127,087, labilites of $27.455, 12.283 shares of outstanding, and its stock was trading at a price of $10 per share at December 31, 2016. Net income for 2016 was $11.445 Required: a. Calculate EPS for 2016. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) b. Calculate ROE for 2016. (Round your answer to 1 decimal place.) c. Calculaze the Price Eamings Ratio for 2016. (Do not round intermediate calculations Round your final answer to 2 decimal places) Ratio

Solution

a. EPS of 2016

EPS= Income available to common stock holders / No.of shares outstanding

=11,445 /12,283 =.93

b.Return on Equity for 2016

ROE = Net income / Average Equity holders fund

Equity 2015 = Total asset - Total liabilities =108,230-22,882=85,348

Equity 2016 =127,067-27,455=99,612

So average fund =( 85348 +99612)/2=92480

ROE 2016 =11,445 /92,480,= 12.38%

C.Price Earning Ratio for 2016

PE Ratio = MPS / EPS

=10/.93=10.75