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Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883

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BuyFindarrow_forward

Survey of Accounting (Accounting I)

8th Edition
Carl Warren
ISBN: 9781305961883
Textbook Problem

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

Price-earnings ration

To determine

Concept Introduction:

Price Earnings Ratio:

The price earnings ratio shows the relationship between price of the share and earnings per share. It is calculated with the help of following formula:

  Price Earnings Ratio=Market price per shareEarnings per share

To Calculate:

The Price Earnings Ratio.

Explanation

The Price Earnings Ratio is calculated as follows:

    20Y8
    Net profit (A) $ 900,000
    Average Number of Common Shares outstanding (B)

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