Recher Corporation\'s common stock has a par value of $3 per share and has been
ID: 2485249 • 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(Ch.15):
12.53
19.79
0.51
8.36
a.12.53
b.19.79
c.0.51
d.8.36
Explanation / Answer
No of shares = $270000 / $3 = 90000 Shares
Net Income = $17500, hence Earning per share (EPS) = EPS/No of shares = $17500/90000 = $0.194
PE Ratio = Price per share / EPS = $3.76 / $0.19444 = 19.79
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.