Question

The annual report of Redd Cars, Inc., for the year ended December 31, 2014, included the following items (in millions):
Preferred stock outstanding, 3%........................................ $700
Net income......................................................................... $620
Average number of shares of common stock outstanding... 700
1. Compute earnings per share (EPS) and the price-earnings ratio for Redd Cars’ stock.
Round to the nearest cent. The price of a share of Redd Car stock is $11.83.
2. How much does the stock market say $1 of Redd Cars’ net income is worth?



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  • CreatedJuly 25, 2014
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