Miller's Farm Has 100,000 Shares of Stock Outstanding, Sales of $1,550,000

question 60

Multiple Choice

Miller's Farm has 100,000 shares of stock outstanding, sales of $1,550,000, and net income of $95,000. Financial analysts believe the price-earnings ratio for this firm should be 15.8. Given this information, what is the current stock price?

• A)$7.24
• B)$8.87
• C)$14.65
• D)$15.01
• E)$16.63

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Definitions:

Discount Period

The timeframe during which a payment can be made at a reduced rate, often used in terms of early payment of invoices for goods or services.

Controlling Accounts

A summary account in the general ledger that consolidates the totals of subsidiary ledger accounts.

Subsidiary Accounts

Detailed records that support or are linked to a general ledger account, providing specifics about transactions.

General Ledger

A comprehensive set of accounts that records all financial transactions of a business, providing the data needed to compile financial statements.