Question 15 Symons Corporation has provided the following financial data: Divide

Question

Question 15

Symons Corporation has provided the following financial data:

Dividends on common stock during Year 2 totaled $2,500. The market price of common stock at the end of Year 2 was $2.01 per share.

The company’s price-earnings ratio for Year 2 is closest to:

3.79

10.58

0.17

7.44

Balance Sheet December 31, Year 2 and Year 1 Assets Year 2 Year 1 Current assets: Cash $ 225,000 $ 160,000 Accounts receivable, net 191,000 180,000 Inventory 96,000 110,000 Prepaid expenses 91,000 80,000 Total current assets 603,000 530,000 Plant and equipment, net 810,000 840,000 Total assets $ 1,413,000 $ 1,370,000 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 226,000 $ 190,000 Accrued liabilities 66,000 70,000 Notes payable, short term 54,000 50,000 Total current liabilities 346,000 310,000 Bonds payable 170,000 170,000 Total liabilities 516,000 480,000 Stockholders’ equity: Common stock, $5 par value 250,000 250,000 Additional paid-in capital 70,000 70,000 Retained earnings 577,000 570,000 Total stockholders’ equity 897,000 890,000 Total liabilities & stockholders’ equity $ 1,413,000 $ 1,370,000

Explanation / Answer

Earnings per share = 9500/(250000/5)= $0.19 Price-earnings ratio = 2.01/0.19= 10.58 Option 2 is correct

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