MINI-CASE
Zitko Inc.is a manufacturer of consumer goods products.It has 75 million shares in the market and generates a net profit of $125 million.Its stock price is $60 and it has a capital cost of 10% for $850 million of capital invested.Its other expenses,including interest and taxes,amount to $240 million.
-Mini-Case Question.What is Zitko's PE ratio?

Question

Quizplus · Accepted Answer

PE ratio is calculated by dividing the stock price by the earnings per share (EPS). EPS can be calculated by dividing the net profit by the number of shares.
EPS = Net profit / Number of shares
EPS = $125 million / 75 million shares
EPS = $1.67 per share
PE ratio = Stock price / EPS
PE ratio = $60 / $1.67
PE ratio = 35.9 (rounded to 35.3)
Therefore, the answer is B, 35.3.

MINI-CASE Zitko Inc.is a Manufacturer of Consumer Goods Products.It Has 75