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Earnings per share of barnes enterprises changed

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Reference no: EM131332316

Assume the following financial data for the Noble Corporation and Barnes Enterprises:

Noble Corporation

Barnes Enterprises

Total earnings

$1,820,000

$5,620,000

Number of shares of stock outstanding

650,000

2,810,000

Earnings per share

$2.80

$2.00

Price-earnings ratio (P/E)

20×

28×

Market price per share

$56

$56

a. If all the shares of the Noble Corporation are exchanged for those of Barnes Enterprises on a share-for-share basis, what will postmerger earnings per share be for Barnes Enterprises? Use an approach similar to that in Table 20-3.

b. Explain why the earnings per share of Barnes Enterprises changed.

c. Can we necessarily assume that Barnes Enterprises is better off after the merger?

Please explain answers

Reference no: EM131332316

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