Answered: The net income is $800,000, the stock…

Name: The net income is $800,000, the stock market price is $20, the shares
Uploaded: 2024-03-20T06:33:21.000Z
Channel: Bartleby
Description: The net income is $800,000, the stock market price is $20, the shares outstanding is 200,000, please calculate PE ratio.a. 5b. 0.2c. 4d. 0.25

Business

Finance

The net income is $800,000, the stock market price is $20, the shares outstanding is 200,000, please calculate PE ratio. a. 5 b. 0.2 c. 4 d. 0.25

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter12: Fainancial Statement Analysis

Section: Chapter Questions

Problem 38MCQ

See similar textbooks

Related questions

Q: Present Value Years 14 5 30 35 Interest Rate 8% 14 15 8 Future value $ 15,851 55,557 890,073 554,164

A: Present value formula : Present value = Future value / (1 + I)^n where, I = interest rate n = period

Q: Broderick Company entered into the following transactions in the current year. a. On December 31,…

A: The PV calculations use the TVM to determine the value of the future cash flows based on an assumed…

Q: sfandairi Enterprises is considering a new 3-year expansion project that requires an initial fixed…

A: This is a capital budgeting problem. In problems like these we need to determine the cash flows for…

Q: How much should you put into a 20% savings account in order to have P50,000.00 in five years? O a.…

A: Amount required or future value (FV) = P50,000 Interest rate (r) = 0.20 Period (n) = 5 years Amount…

Q: Suppose you wish to retire 40 years from today you determine you need $50,000 per year once you…

A: Given: Payment = $50,000 Interest rate = 6% Retirement years = 25 Retire in = 40

Q: what are interest rates? What do they have to do with the amount of credit provided to businesses…

A: The interest rates regulate the flow of money in a country's economy by controlling the total amount…

Q: You can determine a company's cash situation by analyzing the cash flow statement. The cash flow…

A: Cashflow statement is a financial statement of a company that shows the movement of cash in a…

Q: Esfandairi Enterprises is considering a new 3-year expansion project that requires an initial fixed…

A: The NPV analysis is conducted to determine the profitability of a project. It uses the concept of…

Q: Calculate the total cost, proceeds, and gain (or loss) (in $) for the stock market transaction.

A: Information Provided: Shares sold = 100 Purchase price = $45.20 Selling price = $54.06 Selling…

Q: What is the Delta of an at-the-money binary option with a payoff 0 at < $100, and payoff 1 at ≥…

A: A binary option is a financial contract in which the parties involved are allocated one of two…

Q: On March 1, Wayne Michaels bought 10 bonds from a particular company with a coupon rate of 9.325%.…

A: Coupon rate = 9.325% Purchase Price = 89.875 commission = $9

Q: Why is it important for persons who work in other areas in a business to have an understanding of…

A: Finance is life blood of an Organisation.Your decisions will affect the financial well-being of your…

Q: What is the future worth of P600 deposited at the end of every month for 4 years if the interest…

A: Given: The person deposited 600 Rs in the account .He get 12 % interest for the 4 year. To calculate…

Q: A certain government-issued 10-year bond pays an interest at 16 percent every three months. If the…

A: Given, The term of bond is 10 years Quarterly Coupon rate is 16% Quarterly expense is 83000 Yield…

Q: Using the above financial statements for the Jackson Corporation, calculate the following ratios. a.…

A: Profit Margin: It is a measure of profitability used by investors and other users of financial…

Q: Willie just bought a home and financed his purchase with a $1,000,000 6% 20- year mortgage. (a) What…

A: Mortgage A loan that helps to obtain funds to buy a long-term asset such as a house or real estate…

Q: i. Derive the revenue function. ii. Derive a cost function. iii. What is the total cost of producing…

A: Revenue function gives an equation to determine the revenue generated from selling a good.This is…

Q: A LOAN OF P80,000 IS MADE FOR A PERIOD OF 18 MONTHS AT A SIMPLE INTEREST RATE OF 10%. WHAT DUE AT…

A: Loan amount = P80,000 Annual interest rate = 0.10 or 10% Annual period = 1.5 (i.e. 18 / 12) Amount…

Q: Draw the cash flow diagram with your solution About how many years will P100,000 earn a compound…

A: Present value (P) = P100,000 Interest amount (I) = P50,000 Interest rate = 9% Quarterly interest (r)…

Q: ROT Ltd. is considering whether it should buy or lease equipment that costs 1.60 crores and has a…

A: Present value of annuity due Annuity due is a series of equal payments at equal interval over a…

Q: Tropical Tours is considering an expansion of its operations, which will require the company to…

A: WACC refers to Weighted average cost of capital, it consist the overall cost of debts, equity,…

Q: Consider an entrepreneur who plans to invest in a project that requires an initial investment of…

Q: Solve Problem 20.24 using Excel.

A: The NPV analysis is used to measure a project’s profitability by discounting future cash flows to…

Q: News Corp is expected to pay a dividend of $0.8 in one year. The dividend is expected to grow at 12%…

A: The value of stock can be found as the present value of dividend and the present value of terminal…

Q: How do you decompose the ROE with the DuPont analysis for Walmart?

A: DUPONT is very important relationships that show how return on equity is related to profit margin…

Q: In 1895, the first U.S. Open Golf Championship was held. The winner's prize money was $230. In 2019,…

A: Prize money in 1895 (P1895) = $230 Prize money in 2019 (P2019) = $1,450,000 Period from 1895 to 2019…

Q: The Caraway Seed Company grows heirloom tomatoes and sells their seeds. The heirloom tomato plants…

A: Given, current assets of 48,500 net fixed assets of $249,500 current liabilities of 28,500…

Q: 2040 1832 2872 Sue maintains an average monthly balance on her credit card of about $1340. Her…

A: In the given question, the credit card company charges interest monthly at the rate of 1.5%. Since…

Q: You are the chief financial officer (CFO) of Gaga Enterprises, an edgy fashion design firm. Your…

A: Options B,C,D are correct correct statements option B The investment banking institution will allow…

Q: WHAT WILL BE THE FUTURE WORTH OF MONEY AFTER 6 MONTHS, IF THE SUM OF P100,000 IS INVESTED TODAY AT…

A: Future worth of money at simple interest is calculated as follows Future value of amount invested =…

Q: A 210,000$ issue of ten -year bonds redeemable at par offers 8.67 coupons payable monthly. What is…

A: Solution:- Bond price means the price at which the bond is currently trading in the market. It is…

Q: I have a delta of 0.67, a call premium of $7.53, exerciser price is $92. Current stock price is…

A: Delta of call option is calculated using following equation Delta = Change in call premium / Change…

Q: A factory costs $810,000. You reckon that it will produce an inflow after operating costs of…

A: Initial cost (I) = $810,000 Annual net cash inflow (C) = $171,000 Period (n) = 11 years Cost of…

Q: Bolton Corporation had additions to retained earnings for the year just ended of $248,000. The firm…

A: The earnings per share mean how much earnings are available to each common share. The earnings per…

Q: You are to consider the following projects. Which project would you approve if each project creates…

A: If NPV of project is positive, Project must be accepted. If NPV of project is negative, Project must…

Q: Compute the following ratios. Note: Use a 360-day year. Do not round intermediate calculations.…

A: As per the honor code we are bound to give the answer of first three sub part only, please post the…

Q: Which of the following characteristic(s) is not the one(s) a business has? It obtains financing from…

A: All economic operations that are directly or indirectly related to providing customers with goods…

Q: Johnson Products earned $4.35 per share last year and paid a dividend of $1.70 per share. If ROE was…

A: Select financial information have been given about a company. We have to find the sustainable growth…

Q: -) Consider the following timeline: Date 0 -$150 Cash flow $40 2 $80 f the current market rate of…

A: Given: The current market rate of the interest rate is 13% then calculate the cash flow rate of year…

Q: 5. You drive an average of 460 miles per week in a car that gets 22 miles per gallon. With gasoline…

A: Cost savings One way to help save costs or cut expenses is called cost savings. It helps identify…

Q: P10,000 IS BORROWED FOR 75 DAYS AT 20% PER ANNUM SIMPLE INTEREST. HOW MUCH WILL BE DUE AT THE END OF…

A: Simple interest The method in which interest is charged only above the actual amount borrowed is…

Q: Tembo holds a one-year put option on Shoprite common stock. The put option can be exercised at K50.…

A: “Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only…

Q: Giulia has been a good saver during her time at university whilst working a part-time job, and has…

A: “Since you have posted a question with multiple sub-parts, we will solve first three subparts for…

Q: On January 2, Year 3, JRCorp purchases a 5-year $100,000 face value, 4 perc bond paying annual…

A: The yield to maturity is amount of return realized when bonds are held till maturity. Yield to…

Q: Y3K, Incorporated, has sales of $6,209, total assets of $2,825, and a debt-equity ratio of 1.10. If…

A: Equity= [1/(1+{debt-equity ratio) ]* total assets = [1/(1+1.10)] * 2,825 = (1/2.10)* 2,825 =…

Q: Question # 2: Which of the following statements is CORRECT? a. If Apple issues…

A: Question no.2 In the above question the correct statement would be C. IPO is an example of primary…

Q: Stocks A and B have the following probability distributions of expected future returns: Probability…

A: To Find: Expected return for Stock B Standard deviation for Stock A Coefficient of variation…

Q: There are two projects that are both asking for funding. The company will fund one of the projects,…

A: Given, Initial investment is $1,014 required rate of return is 12%

Q: Solve Problem 20.23 using Excel.

A: In this problem the concept of time value of money will be applied to get the answer. As per the…

Q: (Using common-size financial statements) The S&H Construction Company expects to have total sales…

A: Proforma Income Statement - This is the projected income statement based on certain assumption for…

Concept explainers

Financial Ratios

A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.

Return on Equity

The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.

Topic Video

Question

The net income is $800,000, the stock market price is $20, the shares outstanding is 200,000,
please calculate PE ratio.
a. 5
b. 0.2
c. 4

d. 0.25

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Ratio Analysis MJO Inc. has the following stockholders equity section of the balance sheet: On the balance sheet date, MJOs stock was selling for S25 per share. Required: Assuming MJOs dividend yield is 1%, what are the dividends per common share? Assuming MJOs dividend yield is 1% and its dividend payout is 20%, what is MJOs net income?
Rebert Inc. showed the following balances for last year: Reberts net income for last year was 3,182,000. Refer to the information for Rebert Inc. above. Also, assume that the dividends paid to common stockholders for last year were 2,600,000 and that the market price per share of common stock is 51.50. Required: 1. Compute the dividends per share. 2. Compute the dividend yield. (Note: Round to two decimal places.) 3. Compute the dividend payout ratio. (Note: Round to two decimal places.)
Rebert Inc. showed the following balances for last year: Reberts net income for last year was 3,182,000. Refer to the information for Rebert Inc. above. Also, assume that the market price per share for Rebert is 51.50. Required: 1. Compute the dollar amount of preferred dividends. 2. Compute the number of common shares. 3. Compute earnings per share. (Note: Round to two decimals.) 4. Compute the price-earnings ratio. (Note: Round to the nearest whole number.)
Rebert Inc. showed the following balances for last year: Reberts net income for last year was 3,182,000. Refer to the information for Rebert Inc. above. Required: 1. Calculate the average common stockholders equity. 2. Calculate the return on stockholders equity.
Assume that as of January 1, 20Y8, Sylvester Con- suiting has total assets of $500,000 and total assets of $150,000. As of December 31, 20Y8, Sylvester has total liabilities of $200,000 and total stockholders’ equity of $400,000. (a) What was Sylvester’s stockholders’ equity as of January 1, 20Y8? (b) Assume that Sylvester did not pay any dividends during 20Y8. What was the amount of net income for 20Y8?
Errol Corporation earned net income of $200,000 this year. The company began the year with 10,000 shares of common stock and issued 5,000 more on April 1. They issued $7,500 in preferred dividends for the year. What is the numerator of the EPS calculation for Errol?
The Castle Company recently reported net profits after taxes of $15.8 million. It has 2.5 million shares of common stock outstanding and pays preferred dividends of $1 million a year. The company’s stock currently trades at $60 per share. Compute the stock’s earnings per share (EPS). What is the stock’s P/E ratio? Determine what the stock’s dividend yield would be if it paid $1.75 per share to common stockholders.
The Kretovich Company had a quick ratio of 1.4, a current ratio of 3.0, a days’ sales outstanding of 36.5 days (based on a 365-day year), total current assets of $810,000, and cash and marketable securities of $120,000. What were Kretovich’s annual sales?
Twenty metrics of liquidity, solvency, and profitability The comparative financial statements of Automotive Solutions Inc. are as follows. The market price of Automotive Solutions Inc. common stock was $119.70 on December 31, 20Y8 Instructions Return on stockholders’ equity
Twenty metrics of liquidity, solvency, and profitability The comparative financial statements of Automotive Solutions Inc. are as follows. The market price of Automotive Solutions Inc. common stock was $119.70 on December 31, 20Y8 Instructions Return on common stockholders’ equity
Income Statement Ratio The income statement of Holly Enterprises shows operating revenues of $134,800, selling expenses of $38,310, general and administrative expenses of $36,990, interest expense of $580, and income tax expense of $13,920. Hollys stockholders equity was $280,000 at the beginning of the year and $320,000 at the end of the year. The company has 20,000 shares of stock outstanding at the end of the year. Required Compute Hollys profit margin. What other information would you need in order to comment on whether this ratio is favorable?