a) You are given the following information in relation to Percussion Ltd: Sales £29,250,000 Gross profit...

a) You are given the following information in relation to Percussion Ltd:

Sales £29,250,000

Gross profit margin 10%

General expenses £675,000

Tax £450,000

Number of shares issued at start of the period 400,000

Number of shares issued at full market price of £190 per share for cash, half way through the period 320,000

Required:

(i) Calculate the price earnings ratio and the earnings per share for Percussion Ltd.

(ii) If a company has a high price earnings ratio, what might this indicate about the company? How might the price earnings ratio change if a company increased its gearing?

Expert Solution

ekkarill92 answered 2 years ago

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