The Following Information Pertains to Diane Company Liabilities and Stockholders' Equity

question 86

Multiple Choice

The following information pertains to Diane Company. Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit.
Assets
$\begin{array}{lr}\text { Cash and short-term investments } & \$ 30,000 \\\text { Accounts receivable (net) } & 20,000 \\\text { Inventory } & 15,000 \\\text { Property, plant, and equipment } & 185,000 \\\text { Total assets } & \$ 250,000\end{array}$ Liabilities and Stockholders' Equity
$\begin{array}{lr}\text { Current liabilities } & \$ 45,000 \\\text { Long-term liabilities } & 70,000 \\\text { Common stock } & 80,000 \\\text { Retained earnings } & 55,000 \\\text { Total liabilities and stockhol ders' equity } & \$ 250,000\end{array}$ Income Statement
$\begin{array}{lr}\text { Sales } & \$ 85,000 \\\text { Cost of goods sold } & 45,000 \\\text { Gross margin } & \$ 40,000 \\\text { Operating expenses } & (15,000) \\\text { Interest expense } & (5,000) \\\text { Net income } & \$ 20,000\end{array}$
$$\begin{array} { l r } \text { Number of shares of common stock outstanding } & 6,000 \\\text { Market price of common stock } & \$ 20 \\\text { Total dividends paid } & \$ 9,000 \\\text { Cash provided by operations } & \$ 30,000\end{array}$$
-What is the price-earnings ratio for Diane Company?

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Definitions:

Equilibrium Wage

The wage rate at which the quantity of labor supplied equals the quantity of labor demanded, resulting in a stable employment situation without surpluses or shortages.

Efficiency Wage

is the concept that paying workers a higher wage than the market equilibrium can lead to higher productivity and efficiency, incentivizing better performance and loyalty.

Similar Job

Pertains to a job that has duties, skills, and responsibilities closely matching those of another job, often within the same industry or field.

Adverse Selection

A situation where asymmetric information results in high-risk individuals being more likely to participate in an agreement than low-risk individuals, typically in insurance markets.