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Question 15

Symons Corporation has provided the following financial data:

Balance Sheet
December 31, Year 2 and Year 1
Assets	Year 2			Year 1
Current assets:
Cash	$	225,000		$	160,000
Accounts receivable, net		191,000			180,000
Inventory		96,000			110,000
Prepaid expenses		91,000			80,000
Total current assets		603,000			530,000
Plant and equipment, net		810,000			840,000
Total assets	$	1,413,000		$	1,370,000
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	226,000		$	190,000
Accrued liabilities		66,000			70,000
Notes payable, short term		54,000			50,000
Total current liabilities		346,000			310,000
Bonds payable		170,000			170,000
Total liabilities		516,000			480,000
Stockholders equity:
Common stock, $5 par value		250,000			250,000
Additional paid-in capital		70,000			70,000
Retained earnings		577,000			570,000
Total stockholders equity		897,000			890,000
Total liabilities & stockholders equity	$	1,413,000		$	1,370,000

Income Statement
For the Year Ended December 31, Year 2
Sales (all on account)	$	1,260,000
Cost of goods sold		760,000
Gross margin		500,000
Operating expenses		473,429
Net operating income		26,571
Interest expense		13,000
Net income before taxes		13,571
Income taxes (30%)		4,071
Net income	$	9,500

Dividends on common stock during Year 2 totaled $2,500. The market price of common stock at the end of Year 2 was $2.01 per share.

The companys price-earnings ratio for Year 2 is closest to:

		3.79
		10.58
		0.17
		7.44

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