Sperle Corporation Has Provided the Following Data Concerning Its Stockholders

question 208

Multiple Choice

Sperle Corporation has provided the following data concerning its stockholders' equity accounts: Net income for Year 2 was $30,400.Dividends on common stock during Year 2 totaled $6,400.The market price of common stock at the end of Year 2 was $3.08 per share. The company's price-earnings ratio for Year 2 is closest to:

• A)0.38
• B)4.53
• C)5.70
• D)8.11

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Definitions:

Gross Profit Rate

The ratio of gross profit to net sales, expressing the percentage of revenue that exceeds the cost of goods sold.

Net Sales

The total revenue generated from goods or services sold by a company, minus returns, allowances, and discounts.

Gross Profit

The financial result obtained after subtracting the cost of goods sold from total revenue, indicating the efficiency of a company in managing its production and labor costs.

Operating Expenses

Expenses incurred from the normal operations of a business, excluding the cost of goods sold, such as rent, salaries, and utilities.