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Exercise 11-19A (Algo) Using the P/E ratio LO 11-9 Lake Incorporated...

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Accounting

Exercise 11-19A (Algo) Using the P/E ratio LO 11-9
Lake Incorporated and River Incorporated reported net incomes of $348,000 and $288,000, respectively, for the most recent fiscal year. Both companies had 60,000 shares of common stock issued and outstanding. The market price per share of Lakes stock was $63, while Rivers sold for $67 per share.
Required
Determine the P/E ratio for each company.
Based on the P/E ratios computed in Requirement a, which company do investors believe has the greater potential for growth in income?

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