Operating Proft Margin and EPS.
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YOU ARE GIVEN THE FOLLOWING ESTIMATED PER SHARE DATA RELATED TO THE S&P INDUSTRIAL INDEX FOR THE YEAR 2010:
SALES $1,320.00
DEPRECIATION $ 58.00
INTEREST EXPENSE $ 28.00
YOU ARE INFORMED THAT THE ESTIMATED OPERATION PROFIT MARGIN IS 0.16 AND THE TAX RATE IS 32 PERCENT.
a-COMPUTE THE ESTIMATED EPS FOR 2010.
b-ASSUME THAT A MEMBER OF THE RESEARCH COMMITTEE FOR YOUR
FIRM FEELS THAT IT IS IMPORTANT TO CONSIDER A RANGE OF
OPERATING PROFIT MARGIN (OPM) ESTIMATES. THERFORE, YOU ARE
ASKED TO DRIVE BOTH OPTIMISTIC AND PESSIMISTIC EPS ESTIMATES
USING 0.15 AND 0.17 FOR THE OPM AND HOLDING EVERYTHING ELSE
CONSTANT.
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Solution Summary
The solution examines operating profit margins and EPS.
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