Richards Corporation Had Net Income of $250,000 and Paid Dividends

question 159

Multiple Choice

Richards Corporation had net income of $250,000 and paid dividends to common stockholders of $50,000. It had 50,000 shares of common stock outstanding during the entire year. Richards Corporation's common stock is selling for $35 per share. The price-earnings ratio is

• A) 7 times
• B) 14 times
• C) 2 times
• D) 5 times

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Definitions:

Compulsion

An irresistible urge to behave in a certain way, especially against one’s conscious wishes.

Phobia

A profound and unreasonable dread or dislike towards a specific thing.

Conversion Reaction

A mental health condition where psychological stress is expressed through physical symptoms, without an underlying physical cause.

Obsessive-Compulsive Disorder

A mental disorder characterized by recurring, unwanted thoughts (obsessions) and repetitive behaviors (compulsions) that a person feels driven to perform.