Answered: price of common shares is $30, what is…

price of common shares is $30, what is the price-earnings ratio on common stock for Year 2? (Round intermediate computation to two decimal places and final answer to one decimal place.) Oa. 13.4

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Stockholder's Equity

The stockholders’ equity (often referred to as the book value of the company) is the number of assets available to the stockholder after its entire liabilities is paid off. The stockholders’ equity is also sometimes referred to as owner's equity. The stockholders’ equity or book value generally includes common stock, treasury stock retained earnings. It is an indicator of a company's financial strength and is an important item on the company's balance sheet.

Question

price of common shares is $30, what is the price-earnings ratio on common stock for Year 2? (Round intermediate computation to
two decimal places and final answer to one decimal place.)
Oa. 13.4

Expert Solution

Step 1

Price earnings ratio = Market price per share/ Earnings per share

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