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The balance sheets at the end of each of the first two years of operations...

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Question

Accounting

The balance sheets at the end of each of the first two years of operations indicate the following:

2016

2015
Total current assets

$600,000

$560,000
Total investments

60,000

40,000
Total property, plant, and equipment

900,000

700,000
Total current liabilities

125,000

80,000
Total long-term liabilities

350,000

250,000
Preferred 9% stock, $100 par

100,000

100,000
Common stock, $10 par

600,000

600,000
Paid-in capital in excess of par--common stock

60,000

60,000
Retained earnings

325,000

210,000

Based on the above information, if net income is $130,000 and interest expense is $40,000 for 2016, and the market price is $40, what is the price-earnings ratio on common stock (round to one decimal place)?

Question 57 options:

a)

14.9

b)

18.4

c)

17.3

d)

19.8

Answer & Explanation Solved by verified expert
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