1. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning LESSON 15-2 Analyzing an Income Statement

2. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 2 LESSON 15-2 TERMS REVIEW financial ratio – comparison between two items of financial information earnings per share – amount of net income after federal income tax belonging to a single share of stock Net Income after Fed. Income tax/Number of Shares Outs. 80,313.95 / 2500 = 32.13 Earnings per share price-earning ratio – Relationship between market value per share and earnings per share of stock Market Price per share/Earnings per share 345/32.13 = 10.7 Price-Earnings Ratio page 460

3. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 3 LESSON 15-2 ANALYZING AN INCOME STATEMENT SHOWING A NET LOSS page 457

4. CENTURY 21 ACCOUNTING © 2009 South-Western, Cengage Learning 4 LESSON 15-2 Price-Earnings Ratio = Earnings per Share ÷ Market Price per Share Earnings per Share = Number of Shares Outstanding ÷ Net Income after Federal Income Tax FINANCIAL RATIOS page 459 Earnings per Share Price-Earnings Ratio $32.13=2,500÷$80,313.95 10.7=$32.13÷$345.00