Children's Books,Inc

question 63

Multiple Choice

Children's Books,Inc.has net income of $48,000 and a plowback ratio of 85 percent.There are 25,000 shares of stock outstanding at a market price of $18.64 a share.What is the price-earnings ratio?

• A)6.9
• B)7.1
• C)9.7
• D)11.1
• E)11.6

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Definitions:

Credit Policies

Guidelines that set the criteria for extending credit to customers, including terms of payment and requirements for creditworthiness.

Short-Term Debt

Short-Term Debt is borrowed money that a company must repay within the short term, typically within a year, often used for operational expenses.

Interest Rate Fluctuations

Changes in the interest rate over time, affecting borrowing costs, savings rates, and investment returns.

Refund Risk

The risk that a debt issuer will repay borrowed funds before the maturity date, typically in a declining interest rate environment.