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

question 41

Multiple Choice

The following information pertains to Soho Company. Assume that all statement of financial position amounts represent both average and ending balance figures. Assume that all sales were on credit. $\begin{array}{lr}\text { Assets }\\\text { Property, plant and equipment } & \$ 210,000 \\\text { Inventory } & 20,000 \\\text { Accounts receivable (net) } & 25,000 \\\text { Cash and short-term investments } & 40,000 \\\quad \text { Total Assets } & \$ 295,000\\\\\text { Equity and Liabilities }\\\text { Shareholders' equity\_ordinary } & \$ 150,000 \\\text { Non-current liabilities } & 85,000 \\\text { Current liabilities } & 60,000 \\\text { Total Equity and Liabilities } & \$ 295,000 \\\\\text { Income Statement }\\\text { Sales revenue } & \$ 85,000 \\\text { Cost of goods sold } & 45,000 \\\text { Gross margin } & 40,000 \\\text { Operating expenses } & 20,000 \\\quad \text { Net income } & \$ 20,000 \\\\\text { Number of ordinary shares } & 6,000 \\\text { Market price of ordinary shares } & \$ 20 \\\text { Dividends per share } & .90\end{array}$ What is the price-earnings ratio for Soho?

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

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