A compsny repanted net income of $22.8 mttion. Duing the year the average number

Question

A compsny repanted net income of $22.8 mttion. Duing the year the average number of common shares ousstanding wes 38 Tion The prce of a share of common sock et the end of the year was $5. There were 720,000 shsies of prefesred stock outstanding on sverage and na dvidends were declered and the prederred stock is norcumulatve 19. Required a Use the informenon ebove to arswer the folowing question. The EPs is apprdalmsrey O s017 O 56.00 O $576 20 use the informonon above to answerte folore question The Freo Eomrgs ResS 00 meeey E G0 O 684 O 083

Explanation / Answer

(19(

Net Income = $ 22.8 million and Number of Outstanding Common Stock = 3.8 million

Therefore, EPS = Net Income / Number of Outstanding Common Stock = 22.8 / 3.8 = $ 6

(20) Price per share = $ 5 and Earnings per share = $ 6

Therefore Price to Earnings Ratio = Price per share / Earnings per share = (5/6) = 0.83

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