Toni and Felix Are Considering Buying Stock

question 292

Multiple Choice

Toni and Felix are considering buying stock. They would like to purchase 600 shares of Sudsy Soap stock at $35 a share. Sudsy Soap had the following figures for the past year:

-What is Sudsy Soap's P/E ratio?

• A)0.233
• B)2.33
• C)3.
• D)35

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Definitions:

Statement of Financial Position

A financial statement that details a company's assets, liabilities, and shareholders' equity at a specific point in time.

Cash Basis

An accounting method where revenues and expenses are recognized when cash is received or paid, as opposed to when they are incurred.

Statement of Cash Flows

A financial statement that provides aggregate data regarding all cash inflows and outflows a company receives from its ongoing operations and external investment sources.