Asked by Benoit BOUDA on Jun 25, 2024
Verified
Rawdon Corporation's net operating income in Year 2 was $52,429, net income before taxes was $34,429, and the net income was $24,100.Total common stock was $360,000 at the end of both Year 2 and Year 1.The par value of common stock is $4 per share.The company's total stockholders' equity at the end of Year 2 amounted to $976,000 and at the end of Year 1 to $960,000.The company's earnings per share for Year 2 is closest to:
A) $0.58 per share
B) $0.38 per share
C) $0.27 per share
D) $5.84 per share
Earnings Per Share
A measure of a company's profitability calculated by dividing net income by the number of outstanding shares.
Net Operating Income
Represents the amount of profit realized from a business's operations after subtracting all operating expenses from operating revenues.
Common Stock
A type of equity security that represents ownership in a corporation, with voting rights and potential dividends.
- Compute and elucidate price-earnings ratios.
Verified Answer
= $24,100 ÷ 90,000 shares = $0.27 per share (rounded)
*Number of common shares outstanding = Common stock ÷ Par value
= $360,000 ÷ $4 per share = 90,000 shares
Learning Objectives
- Compute and elucidate price-earnings ratios.
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