Hartzog Corporation's most recent balance sheet and income statement appear below: Dividends on common stock during Year 2 totaled $60 thousand. Dividends on preferred stock totaled $5 thousand. The market price of common stock at the end of Year 2 was $7.04 per share.
-The price-earnings ratio for Year 2 is closest to:
A)9.64
B)16.37
C)11.54
D)17.60

Question

Hartzog Corporation's most recent balance sheet and income statement appear below:   Dividends on common stock during Year 2 totaled $60 thousand. Dividends on preferred stock totaled $5 thousand. The market price of common stock at the end of Year 2 was $7.04 per share.
-The price-earnings ratio for Year 2 is closest to:
A)9.64 
B)16.37 
C)11.54 
D)17.60

Quizplus · Accepted Answer

Number of common shares outstanding = Common stock F1F1F1S1F1F1F10 Par value
= $400 F1F1F1S1F1F1F10 $2 per share = 200 shares
Earnings per share = (Net Income - Preferred Dividends)
F1F1F1S1F1F1F10 Average number of common shares outstanding
= ($85 - $5)F1F1F1S1F1F1F10 200 shares = $0.40 per share
Price-earnings ratio = Market price per share F1F1F1S1F1F1F10 Earnings per share
= $7.04 F1F1F1S1F1F1F10 $0.40 = 17.60

Hartzog Corporation's Most Recent Balance Sheet and Income Statement Appear