Dalmatian Corporation's annual report is as follows
March 31, 2016 March 31, 2017
Net Income $360,000 $428,500
Preferred Dividends 0 0
Total Stockholders' Equity $4,250,000 $5,102,000
Stockholders' Equity attributable to Preferred Stock 0 0
Number of Common Shares Outstanding 290,464 196,168
If the current market price is $23 on March 31, 2016, compute the price/earnings ratio on March 31, 2017. (Round any intermediate calculations and your final answer to the nearest cent.)
A) 13.07
B) 2.18
C) 1.76
D) 10.55
A .A) Average Number of Common Shares Outstanding = (290,464 + 196,168 ) / 2 = 243,316.00
Earnings Per Share = Net Income / Average Number of Common Shares Outstanding Earnings Per Share = $428,500 / 243,316.00 = $1.76
P/E Ratio = Current Market Price / EPS
P/E Ratio = $23 / $1.76 = 13.07
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