Earnings per Share and Price-Earnings Ratio A company reports the following: Net income $530,000 Preferred dividends $30,000 Shares of common stock outstanding 50,000 Market price per share of common stock $87.00 a. Determine the company's earnings per share on common stock. Round your answer to the nearest cent. Use the rounded answer of requirement a for subsequent requirement, if required. $fill in the blank b. Determine the company's price-earnings ratio. Round to one decimal place. fill in the blank
Earnings per Share and Price-Earnings Ratio A company reports the following: Net income $530,000 Preferred dividends $30,000 Shares of common stock outstanding 50,000 Market price per share of common stock $87.00 a. Determine the company's earnings per share on common stock. Round your answer to the nearest cent. Use the rounded answer of requirement a for subsequent requirement, if required. $fill in the blank b. Determine the company's price-earnings ratio. Round to one decimal place. fill in the blank
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Earnings per Share and Price-Earnings Ratio
A company reports the following:
| Net income | $530,000 |
| Preferred dividends | $30,000 |
| Shares of common stock outstanding | 50,000 |
| Market price per share of common stock | $87.00 |
a. Determine the company's earnings per share on common stock. Round your answer to the nearest cent. Use the rounded answer of requirement a for subsequent requirement, if required.
$fill in the blank
b. Determine the company's price-earnings ratio. Round to one decimal place.
fill in the blank
Expert Solution
Step 1 Formula to calculate the earnings per share
We know that earning per share =
Net Income attributable to equity shareholders/Weighted average number of equity shares.
Price-earnings ratio = Market price per share/Earnings per share.
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