A company reports the following: Net income $615,000 Preferred dividends $35,000 Shares of common stock outstanding...

Question

Question

A company reports the following: Net income $615,000 Preferred dividends $35,000 Shares of common stock outstanding...

A company reports the following:

Net income	$615,000
Preferred dividends	$35,000
Shares of common stock outstanding	100,000
Market price per share of common stock	$45.82

a. Determine the company's earnings per share on common stock. Round your answer to the nearest cent. Use the rounded answer of requirement a for subsequent requirement, if required.
$

b. Determine the company's price-earnings ratio. Round to one decimal place.

business accounting

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Answer 1

Answer #1

a) Earning per share = (net income-Preferred dividend)/Share outstanding = (615000-35000)/100000 = 5.8 per share

b) Price earning ratio = MPS/EPS = 45.82/5.8 = 7.9 times

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Answer 2

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