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Raney Corporation had net income of $200,000 and paid dividends to common stockholders of $50,000 in 2008. Weighted average number of shares outstanding in 2008 was 50,000 shares. Raney Corporation's common stock is selling for $40 per share on New York Stock Exchange.

1. Raney Corporation's price-earnings ratio is:

a. 2.5 times.
b. 10 times.
c. 13.3 times.
d. 4 times.

2. Raney Corporation's payout ratio for 2008 is:

a. $4 per share.
b. 33.3%.
c. 25%.
d. 10%.

3. Holt Company reported following on its income statement:

Income before income taxes $420,000
Income tax expense 120,000
Net income $300,000

Analysis of income statement revealed that interest expense was $52,500. Holt Company's time's interest earned was

a. 9 times.
b. 8 times.
c. 7 times.
d. 6 times.

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  • Category:- Accounting Basics
  • Reference No.:- M922048

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