Calculate the earnings per share and price earning ratio

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Reference no: EM13107963

Selected financial information for The Ohio Company is as follows:

Year 1 Year 2
Stockholder's equity:
Preferred Stock, $10 par, 10% $100,000 $100,000
Common Stock, $10, par 200,000 200,000
Additional paid-in capital common stock 150,000 150,000
Retained Earnings 1,250,000 1,480,000
Total stockholder's equity 1,700,000 1,930,000
Total liabilities and stockholder's equity 300,000,000 3,280,000

Net Income 230,000

Additionally, cash dividends declared and paid during Year 2 totaled $165,000 of which $15,000 were preferred dividends. The market price of a share common stock on December 31, Year 2 was $180,000. Note that there are 20,000 shares of common stock ($200,000 / $10 par) at the start and end of year, and no treasury stock, so the average number of shares outstanding is 20,000.

Use the above information to calculate the earnings per share (EPS) and the price earnings (P-E) ratio as of December 31, Year 2.

 

Reference no: EM13107963

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