question archive The balance sheets at the end of each of the first two years of operations indicate the following: Kellman Company Year 2Year 1Total current assets$613,137$554,523Total investments65,57152,386Total property, plant, and equipment857,810629,062Total current liabilities110,00780,868Total long-term liabilities324,900239,112Preferred 9% stock, $100 par93,34893,348Common stock, $10 par523,822523,822Paid-in capital in excess of par-common stock69,66569,665Retained earnings414,776229,156 Using the balance sheets for Kellman Company, if net income is $114,398 and interest expense is $36,688 for Year 2, and the market price of common shares is $30, what is the price-earnings ratio on common stock for Year 2 (rounded to two decimal places)? a
The balance sheets at the end of each of the first two years of operations indicate the following: Kellman Company Year 2Year 1Total current assets$613,137$554,523Total investments65,57152,386Total property, plant, and equipment857,810629,062Total current liabilities110,00780,868Total long-term liabilities324,900239,112Preferred 9% stock, $100 par93,34893,348Common stock, $10 par523,822523,822Paid-in capital in excess of par-common stock69,66569,665Retained earnings414,776229,156 Using the balance sheets for Kellman Company, if net income is $114,398 and interest expense is $36,688 for Year 2, and the market price of common shares is $30, what is the price-earnings ratio on common stock for Year 2 (rounded to two decimal places)? a
Subject:FinancePrice:2.85 Bought3
The balance sheets at the end of each of the first two years of operations indicate the following:
Kellman Company Year 2Year 1Total current assets$613,137$554,523Total investments65,57152,386Total property, plant, and equipment857,810629,062Total current liabilities110,00780,868Total long-term liabilities324,900239,112Preferred 9% stock, $100 par93,34893,348Common stock, $10 par523,822523,822Paid-in capital in excess of par-common stock69,66569,665Retained earnings414,776229,156
Using the balance sheets for Kellman Company, if net income is $114,398 and interest expense is $36,688 for Year 2, and the market price of common shares is $30, what is the price-earnings ratio on common stock for Year 2 (rounded to two decimal places)?
a.11.34
b.14.85
c.2.02
d.10.90
Purchase A New Answer
Custom new solution created by our subject matter experts
GET A QUOTE
Answer Preview
The correct option is :
b. 14.85
?
Step-by-step explanation
First of all we need to calculate the Net Income available to Common Stockholders' as follows :
Net Income - Preferred Dividend
$114398 - 9% of $93348
$114398 - $8401.32
$105996.68
Now EPS can be calculated as follows :
Net Income available to Common Stockholders'
÷
Outstanding Common Shares
$105996.68
÷
52382.2 shares
$2.02 per share
P/E ratio can be calculated as follows :
Market Price per share
÷
EPS
$30 ÷ $2.02
14.85
