Question

During 2013 Catour, Inc., and Pavie, Inc., reported net incomes of $220,000 and $190,000, respectively. Both companies had 50,000 shares of common stock issued and outstanding. The market price per share of Catour’s stock was $50, while Pavie’s sold for $54 per share.

Required
a. Determine the P/E ratio for each company. (Round to the nearest whole number.)
b. Based on the P/E ratios computed in Requirement a, which company do investors believe has the greater potential for growth in income?



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  • CreatedOctober 12, 2013
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