Knife Corp. Use the Selected Data Presented Below from the Financial Statements

question 144

Essay

Knife Corp.
Use the selected data presented below from the financial statements of Knife Corp.for 2012 and 2011 to answer the questions that follow.
Refer to the data for Knife Corp.
REQUIRED:
(A)Calculate earnings per share for 2012 for Knife.Why is this considered one of the most quoted ratios for public companies? Which investors,common or preferred or both,desire this information?
(B)Calculate the price/earnings ratio for 2012 for Knife.Why is this ratio important to investors? Explain.

---

Definitions:

Break-even Point

The production level or sales volume at which total revenues equal total expenses, resulting in no profit or loss.

Marketing Manager

A professional responsible for planning, executing, and overseeing marketing strategies to promote products or services.

Advertising Budget

The amount of money a business plans to spend on marketing and promotion activities.

Contribution Margin

The amount remaining from sales revenue after variable costs have been deducted, indicating how much contributes to covering fixed costs and generating profit.