During 2010, Jason Corporation and Fitzgerald Corporation reported net incomes of $7,000 and $9,600, respectively. Each company

Question:

During 2010, Jason Corporation and Fitzgerald Corporation reported net incomes of $7,000 and $9,600, respectively. Each company had 2,000 shares of common stock issued and outstanding. The market price per share of Jason’s stock was $50, while Fitzgerald’s stock sold for $85 per share.

Required

a. Determine the P/E ratio for each company.

b. Based on the P/E ratios computed in Requirement a, which company do investors believe has more potential for growth in income?

Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...