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08 Apr 2024, 12:41
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Dropdown 1: -12
Dropdown 2: -44
Be sure to select an answer first to save it in the Error Log before revealing the correct answer (OA)!
Difficulty:
95%
(hard)
Question Stats:
26% (03:12) correct
74%
(03:28)
wrong
based on 359
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Not Attempted Yet
The 'Pay' section of the graph illustrates how the size and structure of annual compensation changed for executive management in the US over the period of 2000-2010 for the FTSE 350-rated companies. For the same period, the 'Performance' section of the graph illustrates the increase in the value of the companies managed by these delegates. The change in year-end share price for the duration 2000-10 for all FTSE 350 companies combined, shown by the small, negative bar in the graph, is –5%.
Long-term incentive plan refers to the giving of stock assets as a form of payment, earnings per share refers to the amount of pre-tax profit divided by the number of shares outstanding, and year-end share price is the price at which the stocks sell at the last day of the respective financial year.
Use the dropdown menus to complete the statements accurately, using the information provided in the diagram.
The change in the total number of shares outstanding, during the year 2000-10, of all companies combined, represented in the graph is approximately
P / E ratio is the ratio of the price per share and pre-tax profits per share. The combined P / E ratio for the FTSE 350 companies changed by
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Dropdown 1: -12
Dropdown 2: -44
29 Aug 2024, 00:29
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The change in the total number of shares outstanding, during the year 2000-10, of all companies combined, represented in the graph is approximately [-12]
\(EPS = \frac{Profit}{No.-of-Shares}\)
=> No. of Shares = \(\frac{Profit}{EPS}\)
Profit: F => New F = 1.5F
New EPS: 1.7 EPS
=> New No. of Shares = \(\frac{1.5}{1.7} = 0.88\)
=> 12% Decrease
P / E ratio is the ratio of the price per share and pre-tax profits per share. The combined P / E ratio for the FTSE 350 companies changed by [-44]
(In P/E: E should be earnings per share)
Price P => New P: 0.95P
Earning per share: E => New E: 1.7E
=> New \(\frac{P}{E} = \frac{0.95}{1.75} = 0.56\)
=> 44% Decrease
\(EPS = \frac{Profit}{No.-of-Shares}\)
=> No. of Shares = \(\frac{Profit}{EPS}\)
Profit: F => New F = 1.5F
New EPS: 1.7 EPS
=> New No. of Shares = \(\frac{1.5}{1.7} = 0.88\)
=> 12% Decrease
P / E ratio is the ratio of the price per share and pre-tax profits per share. The combined P / E ratio for the FTSE 350 companies changed by [-44]
(In P/E: E should be earnings per share)
Price P => New P: 0.95P
Earning per share: E => New E: 1.7E
=> New \(\frac{P}{E} = \frac{0.95}{1.75} = 0.56\)
=> 44% Decrease
General Discussion
09 Apr 2024, 14:37
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P1
old: EPS * S = PTP
changed: 1.75 EPS * S = 1.5 PTP
therefore, new S = 1.5 PTP/1.75 EPS = 6/7 PTP/EPS
[note that reverse, or 1/7 is change and thereby answer, can cut below step]
change in S = 6/7 PTP/EPS divided by PTP/EPS - 1 ie 6/7 -1 = -14% and closest to -12%
P2
old: P/E = PPS/EPS
new: P/E = 0.95 PPS / 1.75 EPS
therefore, new P/E = 0.95/1.75 approx = 4/7 = 0.571
[note that reverse, or 3/7 is change and thereby answer, can cut below step]
change in P/E = (0.571 - 1)/1 = 0.429 and closest to -44
please help with any shorter way!
old: EPS * S = PTP
changed: 1.75 EPS * S = 1.5 PTP
therefore, new S = 1.5 PTP/1.75 EPS = 6/7 PTP/EPS
[note that reverse, or 1/7 is change and thereby answer, can cut below step]
change in S = 6/7 PTP/EPS divided by PTP/EPS - 1 ie 6/7 -1 = -14% and closest to -12%
P2
old: P/E = PPS/EPS
new: P/E = 0.95 PPS / 1.75 EPS
therefore, new P/E = 0.95/1.75 approx = 4/7 = 0.571
[note that reverse, or 3/7 is change and thereby answer, can cut below step]
change in P/E = (0.571 - 1)/1 = 0.429 and closest to -44
please help with any shorter way!
