Symons Corporation has provided the following financial data:
Dividends on common stock during Year 2 totaled $2,500. The market price of common stock at the end of Year 2 was $2.01 per share.
-The company's price-earnings ratio for Year 2 is closest to:
A) 3.79
B) 10.58
C) 0.17
D) 7.44

Question

Symons Corporation has provided the following financial data:
   Dividends on common stock during Year 2 totaled $2,500. The market price of common stock at the end of Year 2 was $2.01 per share.
-The company's price-earnings ratio for Year 2 is closest to:
A) 3.79 
B) 10.58 
C) 0.17 
D) 7.44

Quizplus · Accepted Answer

Earnings per share = Net Income ÷ Average number of common shares outstanding*
= $9,500 ÷ 50,000 shares = $0.19 per share (rounded)
*Number of common shares outstanding = Common stock ÷ Par value
= $250,000 ÷ $5 per share = 50,000 shares
Price-earnings ratio = Market price per share ÷ Earnings per share
= $2.01 ÷ $0.19 = 10.58 (rounded)

Symons Corporation Has Provided the Following Financial Data