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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