A company reports the following: Determine the company\'s price-earnings ratio.
ID: 2485978 • Letter: A
Question
A company reports the following:
Determine the company's price-earnings ratio.
$1.60
10.8
9250
12.5
When the contract interest rate (also called "coupon" or "stated" rate) on a particular bond issue is lower than the market rate of interest on similar bonds, the bond issue will sell at
a premium
its face value
its maturity value
a discount
Which of the following would be the most likely to read a managerial accounting report prepared for Nike, Inc.?
a shareholder of Nike's common stock
Nike's controller
the general public
a potential investor in Nike's corporate bonds
Net income $185,000 Preferred dividends $25,000 Shares of common stock outstanding 100,000 Market price per share of common stock $20Explanation / Answer
Price earnings ratio = MArket price per share / Earnings per share
Earnings per share = NEt Income - Preferred Dividend /Weighted Average Common Shares Outstanding
Earnings per share = 185000-25000/100000 = $1.6 per share
Price Earnings ratio = 20/1.6 = 12.5
THe bonds will sell at a discount
A shareholder of Nike's Common stock
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