Question: Rocket Corp. earned net income of $153,040 and paid the minimum dividend to preferred stockholders for 2018. Assume that there are no changes in common shares outstanding during 2018. Rocket's books include the following figures: Prefered Stock-6%, $60 par value; 2,000 shares authorized, 1,000 shares issued and outstanding $60,000 Common Stock-$5 par value- $80,000 shares authorized, 48,000 shares issued, 46,700 shares outstanding $240,000 Paid in Capital in Excess of Par- Common $ 470000 Treasury Stock-Common; ,1300 shares at cost (26000)
Requirements: 1. Compute Rocket's EPS for the year.
2. Assume Rocket's market price of a share of common stock is $12 per share. Compute Rocket's price/earnings ratio.