Sheffield Corporation had net income of $1600000 and paid dividends to common stockholders of $500000 in 2017. The weighted average number of shares outstanding in 2017 was 320000 shares. Sheffield Corporation's common stock is selling for $50 per share on the NASDAQ. Sheffield Corporation's price-earnings ratio is:

The answer is: 10

Explanation:

The price-earnings (P/E) ratio is computed to help investors decide how much to pay for their share per dollar of earnings in given company. As indicated in its name, it is a value derived from dividing the price per share by the earnings per share. Earnings per share (EPS) is the value that ordinary shareholders gain from their investment in a corporation. EPS is computed by dividing the total earnings attributable to ordinary shareholders by the number of ordinary shares outstanding.

In this example, the P/E ratio can be computed as follows:

         Net income                     $1,600,000

Less: Preferred Dividends       $0              

Total earnings                          $1,600,000

The weighted number of shares outstanding at year end = 320,000

EPS = $1,600,000/320,000 = $5/share

P/E = $50/$5 = 10

The P/E ratio indicates that investors are willing to pay up to ten times per dollar attained in earnings or ten times the value per ordinary share.

10

Explanation:

Step 1: Calculation of Earning Per Share (EPS)

EPS is the ratio of net income to weighted average number of shares outstanding in a particular year. This can be calculated for Sheffield Corporation as follows:

EPS = $1,600,000 ÷ 320,000 = $5.0

Step 2: Calculation of the Sheffield Corporation's price-earnings (PE) ratio

Price-earnings (PE) ratio is the ratio of market price per share (MPS) to the EPS. Since Sheffield Corporation's common stock is selling for $50 per share on the NASDAQ, its MPS is therefore $50. Price-earnings (PE) ratio can be calculated as follows:

PE ratio = MPS ÷ EPS = $50 ÷ $5 = 10

Therefore, Sheffield Corporation's price-earnings ratio is 10.

This implies that investors are willing to pay $10 per dollar of earnings.

support your answer using the data presented. (5 points). 4. based on the information you used to schedule and curve, which product would you recommend the shoe hut focus on, and why? provide details that support your answer. (5 points).

a. $48.75

is the answer to your question