Trenton Company has provided the following information:
Net income,$240,000;
Preferred shares issued,6,000;
Average common shares issued,24,000;
Common cash dividends declared and paid,$30,000;
Market price per share,$36
Average treasury shares of common stock,4,000.
What was Trenton's price earnings ratio?
A)3.0
B)5.1
C)3.4
D)4.5

Question

Trenton Company has provided the following information:
 Net income,$240,000;
 Preferred shares issued,6,000;
 Average common shares issued,24,000;
 Common cash dividends declared and paid,$30,000;
Market price per share,$36
Average treasury shares of common stock,4,000.
What was Trenton's price earnings ratio?
A)3.0
B)5.1
C)3.4
D)4.5

Quizplus · Accepted Answer

Earnings per share ($12) = Net income ($240,000) / Average number of common shares outstanding (24,000 - 4,000).Price earnings ratio (3) = Market price per share ($36) / Earnings per share ($12)

Trenton Company Has Provided the Following Information