Fulton Company's price-earnings ratio is 8.0 and the market price of a share of common stock is $32.The company has 3,000 shares of preferred stock outstanding with each share receiving a dividend of $3 per share.The earnings per share of common stock are:

Question

Quizplus · Accepted Answer

To find the earnings per share of common stock, we need to first find the earnings per share of the company. We can use the price-earnings ratio to do this. The formula for the price-earnings ratio is:

Price-earnings ratio = Market price per share / Earnings per share

We have been given that the price-earnings ratio is 8.0 and the market price of a share of common stock is $32. Substituting these values into the formula, we get:

8.0 = 32 / Earnings per share

Multiplying both sides by the earnings per share, we get:

Earnings per share = 32 / 8.0 = $4

Therefore, the earnings per share of common stock is $4.

Fulton Company's Price-Earnings Ratio Is 8