Lake Incorporated and River Incorporated reported net incomes of $215,000 and $165,000, respectively, for the most...

Transcribed Image Text:

Lake Incorporated and River Incorporated reported net incomes of $215,000 and $165,000, respectively, for the most recent fiscal year. Both companies had 50,000 shares of common stock issued and outstanding. The market price per share of Lake's stock was $59, while River's sold for $63 per share. Required a. Determine the P/E ratio for each company. b. Based on the P/E ratios computed in Requirement a, which company do investors believe has the greater potential for growth in income? Complete this question by entering your answers in the tabs below. Required A Required B Determine the P/E ratio for each company. Note: Do not round intermediate calculations. Round your answers to the nearest whole number. Company Lake, Incorporated River, Incorporated P/E Ratio < Required A Required B > Lake Incorporated and River Incorporated reported net incomes of $215,000 and $165,000, respectively, for the most recent fiscal year. Both companies had 50,000 shares of common stock issued and outstanding. The market price per share of Lake's stock was $59, while River's sold for $63 per share. Required a. Determine the P/E ratio for each company. b. Based on the P/E ratios computed in Requirement a, which company do investors believe has the greater potential for growth in income? Complete this question by entering your answers in the tabs below. Required A Required B Determine the P/E ratio for each company. Note: Do not round intermediate calculations. Round your answers to the nearest whole number. Company Lake, Incorporated River, Incorporated P/E Ratio < Required A Required B >