
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question
Liberty Corporation reported the following financial statements:
The company has 2,500 shares of common stock outstanding and the market price is $20 per share. What is Liberty’s price/earnings ratio?
a. 0.08
b. $0.08
c. 12.35
12.35 times

Transcribed Image Text:LIBERTY CORPORATION
Comparative Balance Sheet
December 31, 2019 and 2018
2019
2018
Assets
Current Assets:
Cash and Cash Equivalents
$ 2,450
$ 2,094
Accounts Receivable
1,813
1,611
Merchandise Inventory
1,324
1,060
1,709
2,120
Prepaid Expenses
7,296
6,885
Total Current Assets
18,500
15,737
Other Assets
$ 25,796
$ 22,622
Total Assets
Liabilities
$ 7,230
$ 8,467
Current Liabilities
4,798
3,792
Long-term Liabilities
Total Liabilities
12,028
12,259
Stockholders' Equity
Common Stock, no par
6,568
4,363
Retained Earnings
7,200
6,000
Total Stockholders' Equity
13,768
10,363
Total Liabilities and Stockholders' Equity
$ 25,796
$ 22,622
LIBERTY CORPORATION
Income Statement
Year Ended December 31, 2019
$ 20,941
Net Sales Revenue
Cost of Goods Sold
7,055
13,886
Gross Profit
7,065
Operating Expenses
6,821
Operating Income
210
Interest Expense
Income Before Income Taxes
6,611
2,563
Income Tax Expense
$ 4,048
Net Income
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