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The following amounts were taken from the financial statements of Plant Company: 2012 2011 Total assets $800,000 $1,000,000 Net sales 720,000 650,000 Gross profit 352,000 320,000 Net income 150,000 117,
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25 votes
25 votes
The following amounts were taken from the financial statements of Plant Company: 2012 2011 Total assets $800,000 $1,000,000 Net sales 720,000 650,000 Gross profit 352,000 320,000 Net income 150,000 117,000 Weighted average number of common shares outstanding 60,000 90,000 Market price of common stock $67.50 $39 The price-earnings ratio for 2012 is Group of answer choices 27 times. 45 times. 11 times. 2.5 times.

User ManUtopiK
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1 Answer

18 votes
18 votes

Answer:

the price earning ratio is 27 times

Step-by-step explanation:

The computation of the price earning ratio is given below;

as we know that

price earning ratio

= Market price ÷ earning per share

= $67.50 ÷ ($150,000 ÷ 60,000 shares)

= $67.50 ÷ 2.5

= 27 times

hence, the price earning ratio is 27 times

Therefore the same should be considered

User Smukamuka
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3.1k points
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