FIN 301 E Problem #3 (P/E and EPS): Tom's management team is very concerned about its company's price- earnings ratio and earnings per share. 1. Calculate the earnings per share and the P/E ratio for Tom's. 2. Assume that Whole Food's EPS is $2.25 per share and the P/E ratio is 10x. Compare Tom's ratios to Whole Food's. What conclusions can you draw? Balance Sheet (Millions of $) Income Statement (Millions of $) Assets 2019 2019 Cash and securities $2,145.00 Net sales $58,500.00 Accounts receivable $8,970.00 Operating costs except depreciation $54,698.00 Inventories $12,480.00 Depreciation $1,025.00 Total current assets $23,595.00 Earnings before interest and taxes (EBIT) $2,779.00 Net plant and equipment $15,405.00 Less interest $829.00 Total assets $39,000.00 Earnings before taxes (EBT) $1,950.00 Taxes $682.00 Liabilities and Equity Net income $1,268.00 Accounts payable $7,410.00 Accruals $4,290.00 Other data: Notes payable $5,460.00 Shares outstanding (millions) 500 Total current liabilities $17,160.00 Common dividends (millions of $) $443.63 Long-term bonds $7,800.00 Int rate on notes payable & L-T bonds 6.25% Total liabilities $24,960.00 Federal plus state income tax rate 35% Common stock $5,460.00 Year-end stock price $30.42 Retained earnings $8,580.00 Total common equity $14,040.00 Total liabilities and equity $39,000.00 4 Page