Daniel Corporation Had Net Income for 2018 of $75,000

question 18

Multiple Choice

Daniel Corporation had net income for 2018 of $75,000.Daniel had 6000 shares of common stock outstanding at the beginning of the year and 22,000 shares of common stock outstanding at the end of the year.There were 8000 shares of preferred stock outstanding all year.During 2018,Daniel declared and paid preferred dividends of $26,000.On December 31,2018,the market price of Daniel's common stock is $45 per share and the market price of its preferred stock is $73 per share.What is Daniel's price/earnings ratio at December 31,2018? (Round any intermediate calculations and your final answer to the nearest cent.)

• A) 12.86
• B) 20.86
• C) 13.20
• D) 13.63

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Definitions:

Depreciation

An accounting method of allocating the cost of a tangible or physical asset over its useful life to account for declines in value.

Earnings Before Interest And Taxes

A gauge of corporate profit that disregards expenses related to interest and income tax.

OCF

Operating Cash Flow, which is the cash generated from normal business operations, indicating a company's ability to generate sufficient positive cash flow to maintain and grow its operations.

Depreciation

Depreciation is the accounting process of allocating the cost of a tangible asset over its useful life, reflecting the decrease in value over time.