Lake Incorporated and the River, Incorporated reported net incomes of $310,000 and $250,000, respectively, for the most recent fiscal year. Both companies had 50,000 shares of common stock issued and outstanding. The market price per share of Lakes stock was $65, while Rivers sold for $69 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 the greater potential for growth in income?

A:

B:

Lake Incorporated and the River, Incorporated reported net incomes of $310,000 and $250,000, respectively, for the most recent fiscal year. Both companies had 50,000 shares of common stock issued and outstanding. The market price per share of Lake's stock was $65, while River's sold for $69 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 the greater potential for growth in income? Complete this question by entering your answers in the tabs below. Determine the P/E ratio for each company. (Do not round intermediate calculations. Round your answers to the nearest whole number.) Complete this question by entering your answers in the tabs below. Based on the P/E ratios computed in Requirement a, which company do investors belleve has the greater potential for growth in income? Which company do investors believe has the greater potential for growth in income