Last Year, Hi-Lo Electronics Earned $2

question 97

Multiple Choice

Last year, Hi-Lo Electronics earned $2.50 per share.If the current market value for a share of stock is $55, what is the firm's PE ratio?

• A)0.025
• B)2.5
• C)22
• D)55
• E)It is impossible to calculate a PE ratio with this information.

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Definitions:

Initial Value Method

An accounting approach where investments are recorded at their purchase cost without subsequent adjustment for market changes.

Consolidated Net Income

The total net income of a parent company and its subsidiaries, after eliminating the effects of intercompany transactions.

Investment Account

An account held at a financial institution that holds securities, stocks, bonds, and other investment assets.

Intangible Asset

Assets that are not physical in nature, including goodwill, software, and licensing agreements, valuable to a company's operations.