A Company Originally Issues 180,000 Shares at a Price of $22;

question 50

Multiple Choice

A company originally issues 180,000 shares at a price of $22; one year later the share price is $40 and the number of outstanding shares is unchanged.During the year,the company had net income of $230,400.The P/E ratio at the end of the year is:

• A)0.0002.
• B)24.22.
• C)31.25.
• D)0.0001.

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Definitions:

Cash Dividend

A distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders in cash.

State Corporation Laws

Regulations established by individual states governing the formation, operation, and dissolution of corporations within their jurisdiction.

Comprehensive Income Items

Components of comprehensive income that represent all changes in equity during a period except those resulting from investments by owners and distributions to owners.

Revaluation Surplus

The increase in value of an asset, over its previously recorded cost, reflected in the financial statements.