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Brief Exercise 08-9 (Algo) Using the P/E ratio to evaluate earnings expectations LO 08-9
Mesla Incorporated is a producer of electric vehicles and Gord Incorporated is a producer of gas vehicles. Each company reported net
incomes of $774,000 and $1,754,400, respectively, for the most recent fiscal year. Both companies had 516,000 shares of common
stock issued and outstanding. The market price per share of Mesla's stock was $300, while Gord's sold for $85 per share.
Required:
a. Determine the P/E ratio for each company.
b. Based on the P/E ratios computed in Requirement (a), which company do investors believe has the greater potential for growth in
income?
Complete this question by entering your answers in the tabs below.
Required A Required B
Determine the P/E ratio for each company.
Note: Round EPS to the nearest cent and final answer to the nearest whole number.
Mesla
Incorporated
Gord
Incorporated
Price/Earnings Ratio:
<Required A
Required B >
