Determine the price-earnings ratio for research in motion

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Reference no: EM13900711

The following comparative net income and earnings per share data are provided for Research in Motion Ltd., developer of the BlackBerry wireless handheld device, for three recent fiscal years:

Year ended	Feb. 28, 2005	Feb. 28, 2004	Mar. 1, 2003
Net income	$213,387	$51,829	$(148,857)
Basic earnings per share	1.14	0.65	(1.92)
Diluted earnings per share	1.09	0.62	(1.92)

The stock market prices at the end of each of the three fiscal years were as follows:

March 1, 2003	$ 6.65
February 28, 2004	49.45
February 28, 2005	66.11

a. Determine the price-earnings ratio for Research in Motion for each of the three fiscal years, using basic earnings per share and the ending stock market price. Round to two decimal places.

b. What conclusions can you reach by considering the price-earnings ratio?

c. Why is the diluted earnings per share less than the basic earnings per share?

Reference no: EM13900711

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