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The Following Information Pertains to Sampson Company What Is the Price-Earnings Ratio for Sampson?
A)5

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The following information pertains to Sampson 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 $45,000 Accounts receivable (net)  25,000 Inventory 20,000 Property, plant and equipment 210,000 Total Assets $300,000 Liabilities and Stockholders’ Equity  Current liabilities $50,000 Long-term liabilities 90,000 Stockholders’ equity-common 160,000 Total Liabilities and Stockholders’ Equity $300,000 Income Statement  Sales $120,000 Cost of goods sold 66,000 Gross profit 54,000 Operating expenses 18,000 Net income $63,000 Number of shares of common stock 6,000 Market price of common stock $20 Dividends per share 50\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\\\\\text { Liabilities and Stockholders' Equity }\\\text { Current liabilities } & \$ 50,000 \\\text { Long-term liabilities } & 90,000 \\\text { Stockholders' equity-common } &160,000 \\\text { Total Liabilities and Stockholders' Equity }&\$300,000\\\\\text { Income Statement }\\\text { Sales } & \$ 120,000 \\\text { Cost of goods sold } & 66,000 \\\text { Gross profit } & 54,000 \\\text { Operating expenses } & 18,000 \\\text { Net income }&\$63,000\\\\\text { Number of shares of common stock } & 6,000 \\\text { Market price of common stock } & \$ 20 \\\text { Dividends per share } & 50\end{array} What is the price-earnings ratio for Sampson?

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Definitions:

Demand Function

An illustrative model that displays the amount of a product buyers are prepared and capable of buying at different price levels.

Pumpkins

A plant belonging to the squash family, often used for food, decoration, or as commodities in agricultural markets.

Constant Marginal Cost

A situation where the cost of producing an additional unit of output is the same, regardless of the volume produced.

Inverse Demand

A mathematical function that expresses the price of a good or service as a function of the quantity demanded, showing how price changes with demand.

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