Market Value Ratios Fancy Paws' Year-End Price on Its Common

question 8

Multiple Choice

Market Value Ratios Fancy Paws' year-end price on its common stock is $20. The firm has a profit margin of 12%, total assets of $20 million, a total asset turnover ratio of 0.5, no preferred stock, and there are 2 million shares of common stock outstanding. What is the PE ratio for Fancy Paws?

• A) 3.33
• B) 8.33
• C) 10.00
• D) 33.33

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Definitions:

Periodic Inventory System

An inventory system that records inventory levels and the cost of goods sold at specific intervals, rather than continuously.

FOB Shipping Point

A delivery term indicating that the buyer assumes responsibility for the goods and the risk of damage at the moment the goods leave the seller's premises.

FOB Destination

A shipping term indicating that the seller bears delivery costs and retains ownership until the goods are delivered to the buyer.

Sales Bonuses

Additional compensation given to employees, usually sales personnel, based on performance and achievement of sales targets.