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Question(s) / Instruction(s):

The balance sheets at the end of each of the first two years of operations indicate the following:

                                                                                                2009                       2008

Total current assets                                                        $600,000              $560,000

Total investments                                                            60,000                  40,000

Total property, plant, and equipment                     900,000                 700,000

Total current liabilities                                                    150,000                 80,000

Total long-term liabilities                                              350,000 250,000

Preferred 9% stock, $100 par                                      100,000                 100,000

Common stock, $10 par                                                 600,000                 600,000

Paid-in capital in excess of par—common stock 60,000                   60,000

Retained earnings                                                           325,000                 210,000

If net income is $130,000 and interest expense is $40,000 for 2009, and the market price is $30, what is the price-earnings ratio on common stock (rounded to one decimal place)?

a. 14.9

b. 13.8

c. 10.6

d. 20.0

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