The Following Information Pertains to Jasmin Corporation Jasmin Corporation Had 6,000 Shares of Common Stock Issued and Sheet

question 8

Multiple Choice

The following information pertains to Jasmin Corporation.Assume that all balance sheet amounts represent both average and ending figures.
$\begin{array}{c} \text {Jasmin Corporation}\\ \text { Partial Balance Sheet }\\ \text {December \( 31,20 \mathrm{xx} \) }\\\begin{array}{|lr|}\hline\text { Liabilities and Stockholders' Equity }\\\text { Current liabilities } & \$ 60,000 \\\text { Long-term liabilities } & 90,000 \\\text { Stockholders' equity } & 150,000 \\ \text { Total liabilities and stockholders' equity } & \$ 300,000 \\\hline\end{array}\end{array}$


$\begin{array}{c} \text { Jasmin Corporation}\\ \text { Income Statement}\\ \text { For the Year Ended December 31, 20xx}\\\begin{array}{|ll|}\hline \text { Net sales } & \$ 80,000 \\ \text { Cost of goods sold } & 45,000 \\ \text { Gross margin } & \$ 35,000 \\\text { Operating expenses } & 15,000 \\ \text { Income before income taxes } & \$ 20,000 \\ \text { Income taxes expense } & 5,000 \\ \text { Net income } & \$ 15,000 \\\hline\end{array}\end{array}$
Jasmin Corporation had 6,000 shares of common stock issued and outstanding.The market price of Jasmin common stock on December 31,20xx,was $22.50.Jasmin paid dividends of $0.90 per share during 20xx.
What is the price/earnings (P/E) ratio for this corporation? Round your answer to 2 decimal places.

• A) 8.00 times
• B) 10.50 times
• C) 7.00 times
• D) 9.00 times

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Definitions:

Demand Curves

Graphical representations showing the relationship between the price of a good or service and the quantity of that good or service that consumers are willing and able to purchase at different prices.

Marginal Revenue Curves

Graphical representations that show how marginal revenue varies as output level changes, used by firms to determine the most profitable level of production.

Price Discrimination

A pricing approach where a single provider charges different prices for essentially the same products or services in different markets.

Consumer Surplus

The variance between what consumers are ready and capable of paying for a product or service versus what they actually end up paying.