The Balance Sheet and Income Statement Shown Below Are for Pettijohn

question 76

Multiple Choice

The balance sheet and income statement shown below are for Pettijohn Inc. Note that the firm has no amortization charges, it does not lease any assets, none of its debt must be retired during the next 5 years, and the notes payable will be rolled over.
-What is the firm's P/E ratio?

• A) 12.0
• B) 12.6
• C) 13.2
• D) 13.9

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Definitions:

Lubricants

Substances applied to reduce friction between surfaces in mutual contact, which ultimately decreases the heat generated when the surfaces move.

Period Cost

Expenses incurred by a business that are not directly tied to production activities, such as administrative and selling expenses.

Direct Materials

Raw materials that are directly traceable to the manufacturing of a product and are a significant portion of the total production cost.

Administrative Expense

Costs related to the general management and administration of a company, such as salaries of executive personnel, accounting departments, and front office.