Network Communications recently issued 50

Accounting Nov 22, 2020

Network Communications recently issued 50.000 shares at 515 per share. Company net income is $2,000,000 and total assets are $ 8,000,000 Calculate its price-to-earning ratio TTT + 3 (12 + T-

Expert Solution

Earnings Per Share = Net Income / Number of Shares Outstanding

Earnings per share = $ 2,000,000 / 50,000

Earnings per share = $ 40 per share outstanding

Price Earnings Ratio = Price per Share / Earnings per share

Price Earnings Ratio = $ 15 / $ 40

Price Earnings Ratio = $ 0.375 times

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