Richards corporation had net income of $231,971 and paid dividends to common stockholders of $58,300. it had 55,100 shares of common stock outstanding during the entire year. richards corporation's common stock is selling for $66 per share. the price-earnings ratio (rounded to two decimal places) is:

It is 15.68 times

Explanation:

Price-Earnings Ratio = Market Price per share (MPS)/Earning per share (EPS).

Where EPS = $231,971 /55,100

                   = $4.21

Hence, Price-Earnings Ratio = 66/4.21

                                               =15.68 times

P/E ratio shows the expectations of the market and is the price you  pay per unit of current earnings.

The  ratio is as well being used for valuing companies and to find out whether they are overvalued or undervalued most especially by the investors.

both are integral parts of a corporate balance sheet. the cash flow statement, or statement of cash flows, measures the sources of a company's cash and its uses of cash over a specific time period. the income statement measures a company's financial performance, such as revenues, expenses, profits or losses over a specific time period (in fact, it's sometimes called a statement of financial performance).

a cash flow statement shows exactly how much money a company has received and how much it has spent, traditionally over a period of one month. it captures the current operating results and changes on the balance sheet, such as increases or decreases in accounts receivable or accounts payable, and does not include noncash accounting items such as depreciation and amortization. the cash flow generally comes from revenue received as a result of business activity, but it may be augmented by funds available as a result of credit. a cash flow statement is used to determine the short-term viability and liquidity of a company, specifically how well it is positioned to pay its bills and vendors.

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