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

question 150

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. $\begin{array}{lr}\text { Assets }\\\text { Cash and short-term investments } & \$ 45,000 \\\text { Accounts receivable (net) } & 25,000 \\\text { Inventory } & 20,000 \\\text { Property, plant and equipment } & 210,000 \\\quad \text { Total Assets } & \$ 300,000\end{array}$

$\begin{array}{lr}\text { Liabilities and Stockholders' Equity }\\\text { Current liabilities } & \$ 50,000 \\\text { Long-term liabilities } & 90,000 \\\text { Stockholders' equity—common } & 160,000 \\\quad \text { Total Liabilities and Stockholders' Equity } & \$ 300,000\end{array}$

$\begin{array}{lr}\text { Income Statement }\\\text { Sales } & \$ 100,000 \\\text { Cost of goods sold } & 55,000 \\\text { Gross profit } & 45,000 \\\text { Operating expenses } & 15,000 \\\quad \text { Net income } & \underline{30,000} \\\\\text { Number of shares of common stock } & 6,000 \\\text { Market price of common stock } & \$ 30 \\\text { Dividends per share } & .50\end{array}$ What is the price-earnings ratio for Ortiz?

• A) 6.0 times
• B) 1.1 times
• C) 5 times
• D) 5.5 times

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