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dangina [55]
3 years ago
12

Ale Corporation had net income of $240,000 and paid dividends to common stockholders of $40,000 in 2017. The weighted average nu

mber of shares outstanding in 2017 was 60,000 shares. Ale Corporation's common stock is selling for $76 per share on the New York Stock Exchange. Ale Corporation's price-earnings ratio is?

Business
2 answers:
Aneli [31]3 years ago
7 0

Answer:

The price earnings ratio is 19:1

Explanation:

The price earnings ratio tells us that how much price the investors are willing to pay for $1 of earnings provided by the company. The price earnings ratio is calculate by dividing the price per share by the earnings per share.

Price earnings ratio = Price per share / Earnings per share

The price per share is the market price of the stock.

The earnings per share is calculated using the following formula:

Earnings per share = Net Income  /  Weighted average shares outstanding

Earnings per share = 240000 / 60000 = $4 per share

The price earnings ratio = 76 / 4  =  19 / 1   or 19:1

givi [52]3 years ago
6 0

Answer:

19times

Explanation:

The solution can be seen in the picture attached

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The share price falls when a dividend is paid because the reduction in cash decreases the market value of assets.

After a stock price goes ex-dividend, the share price in the market typically decreases by the amount of the dividend paid in order to reflect the fact that new shareholders there are not entitled to that payment.

In the market, when the dividends are paid out as stock instead of cash, then this can dilute earnings, which can also have a negative impact on share prices in the short term.

Hence, there is still no direct connection between a company's dividend and its stock price.

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On July 1, 20X4, Pillow Corp. obtained significant influence over Sleep Co. through the purchase of 3,000 shares of Sleep's 10,0
puteri [66]

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Explanation:

Income from investment is the percentage of the acquired company's income that the company that acquired it will report as their own based on their percentage of ownership.

By purchasing 3,000 shares out of 10,000, Pillow Corp owns;

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These shares were bough on July 1 so the relevant period will be half a year.

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Answer:

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