You Have Assessed the Following Information for Kid's Apparel Ltd

question 5

Essay

You have assessed the following information for Kid's Apparel Ltd. based on your expectations of the company over the next financial year:
Operating profit (before-tax) $13.8 million
Taxable income $10 million
Company tax rate 30%
Authorised share capital 10 million
Issued share capital 7.5 million
Current share price $21.60
Based on the information provided, calculate the company's price/earnings (P/E) ratio and comment on the company's growth prospects given that the industry average P/E ratio is 12 times.

---

Definitions:

Comparative Advantage

The ability of an individual or entity to produce goods or services at a lower opportunity cost than other producers.

Climate

The long-term pattern of weather conditions in a particular area, including temperature, precipitation, humidity, and seasonal variations.

Technology

The use of scientific understanding to achieve practical goals, particularly within the industrial sector.

World Price

The global market price of a product or service, determined by worldwide demand and supply.