Davis, Inc. and Royal, Inc. reported net incomes of $81,000 and $93,000, respectively, for their most recent
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Davis, Inc. and Royal, Inc. reported net incomes of $81,000 and $93,000, respectively, for their most recent fiscal years. Both companies had 10,000 shares of common stock issued and outstanding. The market price per share of Davis’s stock was $130, while Royal’s sold for $120 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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Related Book For
Introductory Financial Accounting for Business
ISBN: 978-1260299441
1st edition
Authors: Thomas Edmonds, Christopher Edmonds
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