The balance sheets at the end of each of the first two years of operations indic

Question

The balance sheets at the end of each of the first two years of operations indicate the following:Total current assets year 2006 600,000 year 2005 $560,000 Total investemnts (2006) 60,000 (2005) 40,000 total property, plant, and equipment (2006) 900,000 (2005) 700,000 Total current liabilities (2006) 150,000 (2005) 80,000 Total long-term liabilities (2006) 350,000 (2005) 250,000 Preferred 9% stock, $100 par (2006) 100,000 (2005)100,000 common stock, $10 par (2006) 600,000 (2005) 600,000 Paid-in capital in excess of par-common stock (2006) 60,000 (2005) 60,000 retained earnings (2006) 325,000 (2005) 210,000 If net income is $115,000 and interest expense if $30,000 for 2006, and the market price is $30, What is the price-earings ratio on common stock for 2006. ( round to one decimal point)? A 17.0 B 12.1 C 12.4 D 15.9

Explanation / Answer

115000-9000/60000 = 1.77 then 30/1.77 = 17 is the PE ratio

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