Tito Corporation Had Net Income of $2,000,000 and Paid Dividends

question 43

Multiple Choice

Tito Corporation had net income of $2,000,000 and paid dividends to common stockholders of $300,000 in 2017. The weighted average number of shares outstanding in 2017 was 400,000 shares. Tito Corporation's common stock is selling for $50 per share on the NASDAQ. Tito Corporation's price-earnings ratio is

• A) 20 times.
• B) 12 times.
• C) 10 times.
• D) 5 times.

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Definitions:

Initiate

To start, commence, or begin a process, activity, or event.

Price Reduction

A decrease in the price of goods or services, often used as a strategy to increase sales or market share.

Maintenance, Repair

Activities and processes aimed at keeping equipment or facilities in working order and restoring them to operational condition after damage or wear.

Operating Supplies

Items that are consumed during the day-to-day operations of a business, including stationery, cleaning products, and small tools.