A company has earnings per share net income of $890,000; its weighted-average co

Question

A company has earnings per share net income of $890,000; its weighted-average common shares outstanding are 178,000. Its dividend per share is $1.05, its market price per share is $100, and its book value per share is $94.00. Its price-earnings ratio equals

A company has earnings per share net income of $890,000; its weighted-average common shares outstanding are 178,000. Its dividend per share is $1.05, its market price per share is $100, and its book value per share is $94.00. Its price-earnings ratio equals

Explanation / Answer

Calculated as: price-earnings ratio equals

Market Value per Share
Earnings per Share (EPS)

EPS = 890,000/178,000= 5

price-earnings ratio =100/5= 20

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