The retail analyst at Morgan-Sachs values stock of the GAP at $28.00 per share.They are using the average industry P/E ratio of 15.Their forecasted earnings per share for next year is:
A)$0.54.
B)$1.50.
C)$1.87.
D)There is not enough information calculate earnings per share.

Question

Quizplus · Accepted Answer

To calculate the forecasted earnings per share, we need to use the formula: 
Earnings per share = Stock value / P/E ratio

Using the information provided: 
Stock value = $28.00 
P/E ratio = 15 
Earnings per share = $28.00 / 15 = $1.87

Therefore, the option C is the correct answer.

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