A company has net income of $850,000; its weighted-average common shares outstan

Question

A company has net income of $850,000; its weighted-average common shares outstanding are 170,000. Its dividend per share is $1.45, its market price per share is $108, and its book value per share is $106.00. Its price-earnings ratio equals:

3.45.

2.00.

0.55.

21.60.

21.20.

A company has net income of $850,000; its weighted-average common shares outstanding are 170,000. Its dividend per share is $1.45, its market price per share is $108, and its book value per share is $106.00. Its price-earnings ratio equals:

Explanation / Answer

EPS=Net income/ weighted-average common shares outstanding

=(850,000/170,000)=5

PE ratio=Market price/EPS

which is equal to

=(108/5)=21.60

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.