ACCOUNTING-W/CENGAGENOWV2 ACCESS
26th Edition
ISBN: 9781305716780
Author: WARREN
Publisher: CENGAGE L
expand_more
expand_more
format_list_bulleted
Videos
Question
Chapter 13, Problem 13.25EX
(a)
To determine
Earnings per share:
Earnings per share represent the amount of income earned per share of outstanding common stock in a period. This ratio is used for analyzing the profitability of company’s stockholders’.
The following formula can be used to calculate earnings per share:
The earnings per share of Company OM and Company S.
(b)
To determine
To evaluate: The relative profitability of the two companies.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
For the year that just ended, Leaf Manufacturing had net income of $786,400 and preferred dividends of $38,500. Over the same
period, Sky Industries had an EPS of $2.95 and preferred dividends of $42,300. If both firms had 240,000 weighted-average common
shares outstanding, then which of the following statements is true?
O Leaf had a higher EPS but a lower net income.
O Leaf had a lower EPS but a higher net income.
O Leaf had a lower EPS and a lower net income.
O Leaf had a higher EPS and a higher net income.
The Crestar Company reported net income of $142,600 on 26,000 average outstanding common shares. Preferred dividends total $12,600. On the most recent trading day, the preferred shares sold at $56 and the common shares sold at $86. What is this company's current price-earnings ratio? (Do not round your intermediate calculations.) Multiple Choice 15.68 17.20 18.23 None of these answers are correct.
Lake Incorporated and River Incorporated reported net incomes of $275,000 and $231,000, respectively, for the most recent fiscal
year. Both companies had 55,000 shares of common stock issued and outstanding. The market price per share of Lake's stock was
$58, while River's sold for $62 per share.
Required
a. Determine the P/E ratio for each company.
b. Based on the P/E ratios computed in Requirement a, which company do investors believe has the greater potential for growth in
income?
Complete this question by entering your answers in the tabs below.
Required A Required B
Determine the P/E ratio for each company.
Note: Do not round intermediate calculations. Round your answers to the nearest whole number.
Company
Lake, Incorporated
River, Incorporated
P/E Ratio
Chapter 13 Solutions
ACCOUNTING-W/CENGAGENOWV2 ACCESS
Ch. 13 - Of two corporations organized at approximately the...Ch. 13 - Prob. 2DQCh. 13 - A corporation with both preferred stock and common...Ch. 13 - An owner of 2,500 shares of Simmons Company common...Ch. 13 - Prob. 5DQCh. 13 - Prob. 6DQCh. 13 - The treasury stock in Discussion Question 7 is...Ch. 13 - What are the three classifications of restrictions...Ch. 13 - Indicate how prior period adjustments should he...Ch. 13 - What is the primary purpose of a stock split?
Ch. 13 - Dividends per share National Furniture Company has...Ch. 13 - Dividends per share Zero Calories Company has...Ch. 13 - Entries for issuing stock On August 26, Mountain...Ch. 13 - Entries for issuing stock On January 22, Zentric...Ch. 13 - Prob. 13.3APECh. 13 - Entries for cash dividends The declaration,...Ch. 13 - Entries for stock dividends Olde Wine Corporation...Ch. 13 - Entries for stock dividends Antique Buggy...Ch. 13 - Prob. 13.5APECh. 13 - Entries for treasury stock On May 27, Hydro...Ch. 13 - Reporting stockholders equity Using the following...Ch. 13 - Reporting stockholders' equity Using the following...Ch. 13 - Prob. 13.7APECh. 13 - Retained earnings statement Noric Cruises Inc....Ch. 13 - Earnings per share Financial statement data for...Ch. 13 - Prob. 13.8BPECh. 13 - Dividends per share Triple Z Inc., a developer of...Ch. 13 - Dividends per share Lightfoot Inc., a software...Ch. 13 - Entries for issuing par stock On April 20,...Ch. 13 - Entries for issuing no-par stock On May 15, Helena...Ch. 13 - Prob. 13.5EXCh. 13 - Prob. 13.6EXCh. 13 - Issuing stock Willow Creek Nursery, with an...Ch. 13 - Prob. 13.8EXCh. 13 - Entries for cash dividends The declaration,...Ch. 13 - Prob. 13.10EXCh. 13 - Treasury stock transactions Mystic Lake Inc....Ch. 13 - Prob. 13.12EXCh. 13 - Prob. 13.13EXCh. 13 - Reporting paid-in capital The following accounts...Ch. 13 - Stockholders' Equity section of balance sheet The...Ch. 13 - Prob. 13.16EXCh. 13 - Retained earnings statement Sumter Pumps...Ch. 13 - Prob. 13.18EXCh. 13 - Statement of stockholders equity The stockholders...Ch. 13 - Prob. 13.20EXCh. 13 - Prob. 13.21EXCh. 13 - Prob. 13.22EXCh. 13 - Prob. 13.23EXCh. 13 - EPS Pacific Gas and Electric Company is a large...Ch. 13 - Prob. 13.25EXCh. 13 - Dividends on preferred and common stock Sunbird...Ch. 13 - Prob. 13.2APRCh. 13 - Selected stock transactions The following selected...Ch. 13 - Entries for selected corporate transactions Morrow...Ch. 13 - Entries for selected corporate transact ions...Ch. 13 - Prob. 13.1BPRCh. 13 - Stock transaction for corporate expansion Pulsar...Ch. 13 - Selected stock transactions Diamondback Welding ...Ch. 13 - Entries for selected corporate transactions6...Ch. 13 - Entries for selected corporate transactions West...Ch. 13 - Prob. 13.1CPCh. 13 - Prob. 13.2CPCh. 13 - Prob. 13.3CPCh. 13 - Prob. 13.4CPCh. 13 - Prob. 13.5CP
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Rebert Inc. showed the following balances for last year: Reberts net income for last year was 3,182,000. Refer to the information for Rebert Inc. above. Also, assume that the market price per share for Rebert is 51.50. Required: 1. Compute the dollar amount of preferred dividends. 2. Compute the number of common shares. 3. Compute earnings per share. (Note: Round to two decimals.) 4. Compute the price-earnings ratio. (Note: Round to the nearest whole number.)arrow_forwardRebert Inc. showed the following balances for last year: Reberts net income for last year was 3,182,000. Refer to the information for Rebert Inc. above. Also, assume that the dividends paid to common stockholders for last year were 2,600,000 and that the market price per share of common stock is 51.50. Required: 1. Compute the dividends per share. 2. Compute the dividend yield. (Note: Round to two decimal places.) 3. Compute the dividend payout ratio. (Note: Round to two decimal places.)arrow_forwardThe balance sheet for Larry underwood Motors shows a book value of stockholders’ equity (book value per share * total shares outstanding) of $1,354,000. Furthermore, the firm’s income statement for the year just ended has a net income of $509,000, which is $0.257 per share of common stock outstanding. The price-earnings ratio for firms similar to Underwood motors is 19.52. What price would you expect Underwood motors shares to sell for? What is the book value per share for Underwood’s shares?arrow_forward
- companys current balance sheet shows total common equity of $5,295,000. The company has 350,000 shares of stock outstanding, and they sell at a price of $27.50 per share. By how much do the firm's market and book values per share differ? (Round your intermediate and final answers to two decimal places.)arrow_forwardThe balance sheet for Larry Underwood Motors shows a book value of stockholders' equity (book value per share×total shares outstanding) of $1,332,000. Furthermore, the firm's income statement for the year just ended has a net income of $523,000, which is $0.251 per share of common stock outstanding. The price-earnings ratio for firms similar to Underwood Motors is 21.18. a. What price would you expect Underwood Motors shares to sell for? b. What is the book value per share for Underwood's shares?arrow_forwardViewPoint Security's financial statements, which were constructed a few days ago, report the company has $1 million of common equity with 500,000 shares of common stock outstanding and its net income was $2.1 million. If ViewPoint's common stock currently sells for $33.60 per share, what are its (a) P/E ratio and (b) M/B ratio?arrow_forward
- Murray Company reports net income of $648,000 for the year. It has no preferred stock, and its weighted-average common shares outstanding is 240,000 shares. Compute its basic earnings per share. Choose Numerator: Basic Earnings Per Share I Choose Denominator: = Basic EPS Basic EPS per sharearrow_forwardOn June 8, Carla Vista Ltd. was incorporated and issued 35,400 common shares for $354,000. On August 19, an additional 8,850 shares were issued for $106,200. On November 2, the company paid $33,984 to repurchase 3,540 common shares and on December 7 it paid $61,360 to repurchase 4,720 common shares. (a) Your answer is partially correct. Calculate the average cost of the common shares on June 8, August 19, November 2, and December 7. (Round answers to 2 decimal places, e.g. 15.25.) Average Cost June 8 Aug. 19 Nov. 2 Dec. 7 $ $ $ eTextbook and Media: 10arrow_forwardEpic Company earned net income of $892,500 this year. There were 370,000 weighted-average common shares outstanding, and preferred shareholders received a $23,000 cash dividend. Compute Epic Company's basic earnings per share. Choose Numerator: Basic Earnings Per Share 1 Choose Denominator: = Basic EPS Basic EPS per sharearrow_forward
- Junkyard Arts, Inc., had earnings of $172,300 for the year. The company had 23,000 shares of common stock outstanding during the year and issued 3,300 shares of $150 par value preferred stock. The preferred stock has a dividend of $9 per share. There were no transactions in either common or preferred stock during the year. Determine the basic earnings per share for Junkyard Arts for the year. Round answer to two decimal places. per sharearrow_forwardFriar Inc. reported net income for Year Five of $2,480,000. It had 720,000 shares of common stock outstanding on January 1, Year Five, and repurchased 120,000 of those shares on September 1, Year Five, as treasury stock. The company has no preferred stock. At the end of Year Five, Friar’s stock was selling for $27 per share. Which of the following is Friar’s price-earnings ratio on that date? Responses 6.54 7.85 9.15 7.40arrow_forwardXYZ Inc reported net income of S283,880 for the year and had 173,230 common shares outstanding throughout the year. Also outstanding all year were 42,540 employee stock options with each option giving the holder the right to purchase one common share at $9.35 per share. The average market price for the common shares during the year was $13.33 per share. Calculate the company's fully diluted earnings per share. a. $1.49 b. $1.66 C $1.64 d. $1.53 e $160arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
Financial Accounting
Accounting
ISBN:9781305088436
Author:Carl Warren, Jim Reeve, Jonathan Duchac
Publisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Earnings per share (EPS), basic and diluted; Author: Bionic Turtle;https://www.youtube.com/watch?v=i2IJTpvZmH4;License: Standard Youtube License