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The income statement, statement of retained earnings, and balance sheet for Somerville Company are as follows: Somerville Company Income Statement For the Year Ended December

The income statement, statement of retained earnings, and balance sheet for Somerville Company are as follows:
Somerville Company
Income Statement
For the Year Ended December 31,20X2
Line Item Description Amount Percent
Net sales $8,281,989100.0%
Less: Cost of goods sold 5,383,29365.0
Gross margin $2,898,69635.0
Less: Operating expenses 1,323,36816.0
Operating income $1,575,32819.0
Less: Interest expense 50,0000.6
Income before taxes $1,525,32818.4
Less: Income taxes (40%)*610,1317.4
Net income $915,19711.0
* Includes both state and federal taxes.
Somerville Company
Statement of Retained Earnings
For the Year Ended December 31,20X2
Line Item Description Amount
Balance, beginning of period $1,979,155
Net income 915,197
Total $2,894,352
Preferred dividends 80,000
Dividends to common stockholders 201,887
Balance, end of period $2,612,465
Somerville Company
Comparative Balance Sheets
At December 31,20X1 and 20X2
Line Item Description 20X120X2
Assets
Current assets:
Cash $2,875,000 $2,580,000
Marketable securities 800,000700,000
Accounts receivable (net)939,776690,000
Inventories 490,000260,000
Other 93,00074,261
Total current assets $5,197,776 $4,304,261
Property and equipment:
Land $1,575,000 $1,067,315
Building and equipment (net)1,348,8001,150,000
Total long-term assets $2,923,800 $2,217,315
Total assets $8,121,576 $6,521,576
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable, short term $1,170,127 $ 543,641
Accounts payable 298,484101,500
Current maturity of long-term debt 3,0002,000
Accrued payables 200,00057,780
Total current liabilities $1,671,611 $ 704,921
Long-term liabilities:
Bonds payable, 10%500,000500,000
Total liabilities $2,171,611 $1,204,921
Stockholders' equity:
Preferred stock, $25 par, 8% $1,000,000 $1,000,000
Common stock, $1.50 par 337,500337,500
Additional paid-in capital*2,000,0002,000,000
Retained earnings 2,612,4651,979,155
Total stockholders' equity $5,949,965 $5,316,655
Total liabilities and stockholders' equity $8,121,576 $6,521,576
* For common stock only.
Also, assume that the price per common share for Somerville is $8.10.
Required:
Compute the price-earnings ratio. Round your interim calculation and final answer to two decimal places.
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