Recher Corporation\'s common stock has a par value of $3 per share and has been
ID: 2485248 • Letter: R
Question
Recher Corporation's common stock has a par value of $3 per share and has been stable at a total value of $270,000 on the company's balance sheet for several years. The total stockholders' equity at the end of this year was $1,023,000 and at the beginning of the year was $1,010,000. Net income for the year was $17,500. Dividends on common stock during the year totaled $4,500. The market price of common stock at the end of the year was $3.76 per share. The company's price-earnings ratio is closest to:
12.53
19.79
0.51
8.36
a.12.53
b.19.79
c.0.51
d.8.36
Explanation / Answer
price/earnings =MPS/EPS EPS = 17500/(270000/3) = 0.194444 MPS =3.76 P/E = 3.76/0.194444 19.33718706 so option b is correct
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