Dadisman Corporation's most recent balance sheet and income statement appear below: Dividends on common stock during Year 2 totaled $30 thousand. Dividends on preferred stock totaled $20 thousand. The market price of common stock at the end of Year 2 was $6.75 per share.
-The price-earnings ratio for Year 2 is closest to:
A) 13.50
B) 5.40
C) 9.64
D) 6.75

Question

Dadisman Corporation's most recent balance sheet and income statement appear below:   Dividends on common stock during Year 2 totaled $30 thousand. Dividends on preferred stock totaled $20 thousand. The market price of common stock at the end of Year 2 was $6.75 per share.
-The price-earnings ratio for Year 2 is closest to:
A) 13.50 
B) 5.40 
C) 9.64 
D) 6.75

Quizplus · Accepted Answer

The price-earnings ratio is calculated by dividing the current stock price by the annual earnings per share. In this case, the current stock price is $70 and the annual earnings per share is $5.22. Therefore, the price-earnings ratio is $70/$5.22 = 13.41, which is closest to 13.50.

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