Financial QA - Extractive

Using the diluted earnings per share (EPS) from FY2022 and the stock price based on the average price paid per share from November 1-30, 2022, calculate the P/E ratio for FY2022. Round answer to two decimal places. Explain the answer and point me to the evidence.

Okay, let's calculate the P/E ratio for FY2022 based on the provided information.

1. Find the Diluted EPS for FY2022:

The document states that the diluted EPS for FY2022 was $8.33. (See page 12 of the document, under "Net Income")

2. Find the Average Stock Price:

The document provides the average price paid per share for the period of November 1-30, 2022, as $270.40. This information is found in the "Issuer Purchases of Equity Securities" table on page 26.

3. Calculate the P/E Ratio:

The P/E ratio (Price-to-Earnings ratio) is calculated as follows:

P/E Ratio = Stock Price / Diluted EPS

P/E Ratio = $270.40 / $8.33 P/E Ratio = 32.45

Therefore, the P/E ratio for FY2022 is 32.45.

Explanation:

The P/E ratio (Price-to-Earnings ratio) is a valuation metric that compares a company's current share price to its earnings per share. A higher P/E ratio generally indicates that investors are willing to pay a higher price for each dollar of earnings. In this case, the P/E ratio of 32.40 for McDonald's in FY2022 suggests that investors are willing to pay $32.45 for every $1 of earnings the company generates.

Evidence:

• Diluted EPS: Page 12 of the document, under "Net Income"
• Average Stock Price: Page 26 of the document, under "Issuer Purchases of Equity Securities" table.