The Able Company had profit of $47,500 and earnings per share of $3.17 during 20B. On December 31, 20B, the shares had a market price of $18.50 per share. What is Able's price/earnings ratio?
A) 25.70
B) 5.84
C) 0.17
D) 8.11

Question

Quizplus · Accepted Answer

Price/earnings ratio (P/E ratio) calculates the market price per share divided by earnings per share. 
P/E ratio = Market price per share / Earnings per share

Market price per share = $18.50
Earnings per share = $3.17
P/E ratio = $18.50 / $3.17 = 5.84

Therefore, the answer is B.

The Able Company Had Profit of $47,500 and Earnings Per