Leonhardt Corporation’s net income last year was $3,800,000. The dividend on common stock was $2.00 per share and the dividend on preferred stock was…

Leonhardt Corporation’s net income last year was $3,800,000. The dividend on common stock was $2.00 per share and the dividend on preferred stock was $1.80 per share. The market price of common stock at the end of the year was $53.40 per share. Throughout the year, 500,000 shares of common stock and 100,000 shares of preferred stock were outstanding. The price-earnings ratio is closest to:

a.9.54

b.7.03

c.7.38

d.10.19

A major difference between financial and managerial accounting is:

a.Government regulations apply to managerial accounting

b.Managerial accounting must follow MAAP and not GAAP

c.Managerial accounting reports are used externally

d.Managerial accounting reports are used exclusively by management

In determining the cost of bank financing, which is the important factor?

a.The prime rate

b.The nominal rate

c.The effective rate

d.The discount rate