The Balance Sheets at the End of Each of the First

question 15

Multiple Choice

The balance sheets at the end of each of the first two years of operations indicate the following: If net income is $115,000 and interest expense is $30,000 for 2012, and the market price is $30, What is the price-earnings ratio on common stock for 2012 (round to one decimal point) ?

• A) 16.9
• B) 12.1
• C) 14.4
• D) 13.3

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Definitions:

Unemployment Compensation Benefits

Payments made to individuals who are temporarily out of work, providing financial support during unemployment.

Pink Slip

Informal term for the notice of dismissal given to an employee.

College Graduate

An individual who has received a degree from a college or university, indicating the completion of a specific program of study.

Cyclical Unemployment

Unemployment that results from business cycle fluctuations in the economy, typically increasing during recessions and decreasing during expansions.