Lake Incorporated and the River, Incorporated reported net incomes of $205,000 and $164,000, respectively, for the most recent fiscal year. Both companies had 41,000 shares of common stock issued and outstanding. The market price per share of Lakes stock was $56, while Rivers sold for $60 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? 

Answer rating: 100% (QA)

PE Ratio and Growth Potential a PE Ratio for Each Company Lake Incorporated PE Ratio Market Price pe... View the full answer