The Following Information Pertains to Unique Company What Is the Price Earnings Ratio for This Company?
A)6

question 121

Multiple Choice

The following information pertains to Unique Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. $\begin{array}{lr}\text { Assets }\\\text { Cash and short-term investments } & \$ 40,000 \\\text { Accounts receivable (net) } & 25,000 \\\text { Inventory } & 20,000 \\\text { Property, plant and equipment } & 210,000 \\\text { Total Assets } & \$ 295,000 \\\\\text { Liabilities and Stockholders' Equity }\\\text { Current liabilities } & \$ 60,000 \\\text { Long-term liabilities } & 85,000 \\\text { Stockholders' equity-Common } & 150,000 \\\text { Total Liabilities and Stockholders' Equity } & \$ 295,000\\\\\text { Income Statement }\\\text { Sales revenue } & \$ 85,000 \\\text { Cost of goods sold } & 45,000 \\\text { Gross margin } & 40,000 \\\text { Operating expenses } & 20,000 \\\text { Net income } & \$ 20,000\\\\\text { Number of shares of common stock } & 6,000 \\\text { Market price of common stock } & \$ 20 \\\text { Dividends per share on common stock } & 0.90 \\\text { Cash provided by operations } & \$ 30,000\end{array}$ What is the price earnings ratio for this company?

• A)6.0 times
• B)2.5 times
• C)8.0 times
• D)4.0 times

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Definitions:

Fair Hedge

A financial strategy used to reduce risk by taking offsetting positions in a security and its derivative, ensuring gains in one offset losses in the other.

British Pounds

The currency of the United Kingdom, also known as GBP (Great British Pound).

Foreign Exchange Gain

A profit derived from the change in exchange rates when converting from one currency to another.

Non-Interest-Bearing Note

A type of debt instrument which does not accrue interest, repaid at its face value at maturity.