Asked by Matthew Payeff on May 11, 2024
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Weightman Corporation's net operating income in Year 2 was $76,385, net income before taxes was $55,385, and the net income was $36,000. Total common stock was $200,000 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 $983,000 and at the end of Year 1 to $950,000. The market price per share at the end of Year 2 was $7.92. The company's price-earnings ratio for Year 2 is closest to: (Round your intermediate calculations to 2 decimal places.)
A) 7.14
B) 0.58
C) 5.18
D) 11.00
Price-Earnings Ratio
A valuation ratio of a company's current share price compared to its per-share earnings, used to evaluate whether a stock is over or undervalued.
Total Common Stock
The total value or number of common shares issued by a company, representing ownership interests.
Market Price
The current price at which an asset or service can be bought or sold in the marketplace.
- Comprehend what the price-earnings ratio represents.
Verified Answer
Learning Objectives
- Comprehend what the price-earnings ratio represents.
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