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Richards Corporation had net income of $166,152 and paid dividends to common stockholders of $48,100. It had 51,600 shares of common stock outstanding during the entire year. Richards Corporation's common stock is selling for $70 per share. The price-earnings ratio (rounded to two decimal places) is

User Czerasz
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5 votes

Answer:

21.74 times

Step-by-step explanation:

The price-earnings ratio refers to the ratio of stock price to the earnings per share.

Given that,

Net income = $166,152

Paid dividends to common stockholders = $48,100

Common stock outstanding during the entire year = 51,600

Selling price of common stock = $70 per share

First, we have to calculate the earning per share.

Earning per share:

= Net income ÷ Common stock outstanding

= $166,152 ÷ 51,600

= $3.22

Price-earnings ratio:

= Market price ÷ Earnings per share

= $70 ÷ $3.22

= 21.74 times

User Douglaslps
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