The Smith corporation has a stock price of $75 per share, and has 20 million sha

Question

The Smith corporation has a stock price of $75 per share, and has 20 million shares of stock outstanding. During the most recent year, the company had $100 million of net income and paid $30 million in common stock dividends.

            a) Compute Smith earnings per share

            b) Compute Smith dividend payout ratio

            c) Compute Smith price-earnings (P/E) ratio

            d) Compute Smith market capitalization

            e) Compute Smith market capitalization category (small-, mid-, or large-cap)

Explanation / Answer

c) Compute Smith price-earnings (P/E) ratio

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