The balance sheets at the end of each of the first two years of operations indicate the following: Kellman Company Year 2 Year 1 Total current assets $605,971 $560,666 Total investments 65,017 44,141 Total property, plant, and equipment 889,919 763,728 Total current liabilities 117,075 83,405 Total long-term liabilities 283,494 227,812 Preferred 9% stock, $100 par 82,758 82,758 Common stock, $10 par 554,007 554,007 Paid-in capital in excess of par-common stock 66,056 66,056 Retained earnings 457,517 354,497
The balance sheets at the end of each of the first two years of operations indicate the following: Kellman Company Year 2 Year 1 Total current assets $605,971 $560,666 Total investments 65,017 44,141 Total property, plant, and equipment 889,919 763,728 Total current liabilities 117,075 83,405 Total long-term liabilities 283,494 227,812 Preferred 9% stock, $100 par 82,758 82,758 Common stock, $10 par 554,007 554,007 Paid-in capital in excess of par-common stock 66,056 66,056 Retained earnings 457,517 354,497
Chapter3: Evaluation Of Financial Performance
Section: Chapter Questions
Problem 19P
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Question
The balance sheets at the end of each of the first two years of operations indicate the following:
| Kellman Company | ||
| Year 2 | Year 1 | |
| Total current assets | $605,971 | $560,666 |
| Total investments | 65,017 | 44,141 |
| Total property, plant, and equipment | 889,919 | 763,728 |
| Total current liabilities | 117,075 | 83,405 |
| Total long-term liabilities | 283,494 | 227,812 |
| 82,758 | 82,758 | |
| Common stock, $10 par | 554,007 | 554,007 |
| Paid-in capital in excess of par-common stock | 66,056 | 66,056 |
| 457,517 | 354,497 |
Using the balance sheets for Kellman Company, if net income is $119,549 and interest expense is $36,122 for Year 2, and the market price of common shares is $46, what is the price-earnings ratio on common stock for Year 2 (rounded to two decimal places)?
a.2.02
b.10.78
c.10.63
d.22.77
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