The retail analyst at Morgan-Sachs values stock of the GAP at $38.00 per share. They are using the average industry "forward" P/E ratio of 17. Their forecasted earnings per share for next year is
A) $0.54.
B) $1.50.
C) $2.24
D) There is not enough information calculate earnings per share.

Question

Quizplus · Accepted Answer

To calculate the forecasted earnings per share for next year, we need to use the formula:

Earnings per share = Stock Price / P/E Ratio

Using the given information, we can plug in the values:

Earnings per share = $38.00 / 17
Earnings per share = $2.24

Therefore, the forecasted earnings per share for next year is $2.24.

The Retail Analyst at Morgan-Sachs Values Stock of the GAP