question 64
Multiple Choice
The following information pertains to Ortiz Company. Assume that all balance sheet amounts represent both average and ending balance figures. Assume that all sales were on credit. Assets Cash and short-term investments Accounts receivable (net) Inventory Property, plant and equipment Total Assets Liabilities and Stockholders’ Equity Current liabilities Long-term liabilities Stockholders’ equity—common Total Liabilities and Stockholders’ Equity Income Statement Sales Cost of goods sold Gross profit Operating expenses Net income Number of shares of common stock Market price of common stock Dividends per share $45,00025,00020,000210,000$300,000$50,00090,000160,000$300,000$100,00055,00045,00015,000$30,0006,000$30.50 What is the price-earnings ratio for Ortiz?
Definitions:
Net Profit
The total earnings of a company after subtracting all expenses, including taxes and operating costs, from its total revenues.
Variable Manufacturing Costs
Expenses that fluctuate with production output levels, including raw materials, direct labor, and utility costs directly involved in the manufacturing process.
Predetermined Fixed Overhead
A budgeted or estimated amount of fixed overhead costs, used to allocate overhead costs to products or services.
Variable Costing
A costing method that includes only variable costs—direct materials, direct labor, and variable manufacturing overhead—in the cost of a unit of product, excluding fixed overhead costs.