Benny Is Considering Investing in Larkman,Inc

question 234

Multiple Choice

Benny is considering investing in Larkman,Inc.The current price of Larkman is $62 a share,the after-tax earnings are $37,900,000,and there are 13,000,000 outstanding shares of common stock.What is Larkman's price/earnings ratio?

• A)15.5
• B)21.3
• C)4.77
• D)17.6

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Definitions:

Income Trusts

Income trusts are investment vehicles that hold income-producing assets and distribute the income earned to the holders, commonly used in sectors like real estate and natural resources.

Free Cash Flow (FCF)

The cash a company generates after accounting for cash outflows to support operations and maintain its capital assets.

Operating Expenses

These are costs associated with the day-to-day operations of a business, excluding costs of goods sold, taxes, and interest expenses.

Taking Deposits

The act of receiving funds from customers, under the agreement that the funds will be returned or made available for withdrawal upon the customer's request.