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Cash Flows, Growth Rate and EPS


For a given share price of a firm's stock, the lower the EPS the lower the price-earnings ratio.

true or false?

1.9 Cash flows from operating activities relate to the buying and selling of long-term assets.

true or false?


Growth rate: Petry Corp. is a growing company with sales of $1.25 million this year. The firm expects to grow at an annual rate of 25 percent for the next three years, followed by a growth of 20 percent per year for the next two years. What will be Petry's sales at the end of five years? (Round to the nearest percent.)

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Franklin Foods announced that its sales were $1,233,450 this year. The company forecasts a growth rate of 16 percent for the foreseeable future. How long will it take the firm to produce earnings of $3 million? (Round off to the nearest year.)

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FV of multiple cash flows: International Shippers, Inc., have forecast earnings of $1,233,400, $1,345,900, and $1,455,650 for the next three years. What is the future value of these earnings if the firm's opportunity cost is 13 percent? (Round to the nearest dollar.)

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Solution Summary

This solution shows step-by-step calculations to determine sales value, earnings and future value of earnings. It also identifies the correct answer for concepts on multiple cash flows, price-earnings ratio, long-term assets and more.