eightman C orporation\'s net operating income in Year 2 was $76,385, net income
ID: 2588684 • Letter: E
Question
eightman C orporation's net operating income in Year 2 was $76,385, net income belioce ae was S55,385, and the net income was $36,000. Total common stock was both $200,000 the end of Year 2 and Year 1·The par value of common stock is $4 per share. The company's total stockholders' equity at the end of Year 2 amounted to $983,000 and at the end of Year 1 w 950,000. The market price per share at the end of Year 2 was $7.92.The company's poice earnings ratio for Year 2 is closest to: a. 7.14 b. 0.58 c. 5.18 d. 11.00 Tip: First find the number of common shares outstanding Second, find earnings per share Third, find price-earning ratioExplanation / Answer
price earning ratio=market price/earning per share
eps =net income/number of hares
36000/50000 since common stock is $200,000 with par value of 4 =.72
p/e ratio=7.92/.72=11
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