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The following information pertains to Diane Company. Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were
The following information pertains to Diane Company. Assume that all balance sheet amounts represent both average and ending balance figures and that all sales were on credit. Use this information to answer the question that follow.
Assets | |
Cash and short-term investments | $30,000 |
Accounts receivable (net) | 20,000 |
Merchandise inventory | 15,000 |
Property, plant, and equipment | 185,000 |
Total assets | $250,000 |
Liabilities and Stockholders' Equity | |
Current liabilities | $45,000 |
Long-term liabilities | 70,000 |
Stockholders' equitycommon | 135,000 |
Total liabilities and stockholders' equity | $250,000 |
Income Statement | |
Sales | $85,000 |
Cost of merchandise sold | 45,000 |
Gross profit | $40,000 |
Operating expenses | (15,000) |
Interest expense | (5,000) |
Net income | $20,000 |
Number of shares of common stock outstanding | 6,000 | |
Market price per share of common stock | $20 | |
Total dividends paid | $9,000 | |
Net cash flows from operating activities | $30,000 |
Using the data provided for Diane Company, what is the price-earnings ratio?
a.4.0
b.8.0
c.6.0
d.2.5
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