McDucket, Inc

question 52

Multiple Choice

McDucket, Inc. generates net profit of $592,000 and has a price-book ratio of 5.2. Total assets are $2,320,000 and total liabilities are $1,289,000. The company has 560,000 common stock outstanding. What is the price-to-earnings ratio?

• A)9.06
• B)9.23
• C)10.12
• D)10.80
• E)11.70

---

Definitions:

Natural Resource

Materials or substances such as minerals, forests, water, and fertile land that occur in nature and can be used for economic gain.

Straight-Line Method

A depreciation technique that allocates an equal amount of an asset's cost to each year of its useful life.

Commercial Substance

A term used in accounting to indicate that a transaction has caused a change in the economic circumstances of a business.

Future Cash Flows

Estimated amounts of money expected to be received or paid out in the future due to current or planned operations or investments.