Other candy-making firms have an average forward P/E ratio of 12 at this time. With a share price of $18.20, what are the expected 2013 EPS for Corine’s Candies if its forward P/E ratio is the same as the industry average?
At the end of 2011, Corine’s Candies Inc. had total shareholders’ equity of $13.8 million. In 2012, the company had net income of $5.2 million and paid out half this amount in dividends, resulting in shareholders’ equity at the end of 2012 of $16.4 million. Use the average amount of shareholders’ equity to determine Corine’s ROE for 2012.