Lake Inc. and River Inc. reported net incomes of $310,000 and $250,000, respectively, for the...
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Lake Inc. and River Inc. reported net incomes of $310,000 and $250,000, respectively, for the most recent fiscal year. Both companies had 50,000 shares of common stock issued and outstanding. The market price per share of Lakes stock was $65, while Rivers sold for $69 per share. Required a. Determine the P/E ratio for each company. b. 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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