RTR Corp. has reported a net income of $812,425 for the year. The company's share price is $13.45, and the company has 312,490 shares outstanding. Compute the firm's price-earnings ratio. Round your final answer to two decimal places.
A) 4.87 times
B) 8.12 times
C) 5.17 times
D) None of the above

Question

Quizplus · Accepted Answer

First, we need to calculate the earnings per share (EPS) by dividing the net income by the number of shares outstanding:

EPS = net income / number of shares outstanding
EPS = $812,425 / 312,490
EPS = $2.60

Then, we can calculate the price-earnings (P/E) ratio by dividing the share price by the EPS:

P/E ratio = share price / EPS
P/E ratio = $13.45 / $2.60
P/E ratio = 5.17

Therefore, the correct answer is C) 5.17 times.

RTR Corp Has Reported a Net Income of $812,425 for the the Year