Suppose you own stock in National Advertising which had earnings of $2.50 per share last year. If yesterday's closing price was $41.50, what is the price-earnings ratio of the stock? (Round to the nearest whole number)

Question

Quizplus · Accepted Answer

The price-earnings ratio (P/E ratio) is calculated by dividing the market value per share by the earnings per share (EPS). In this case, $41.50 divided by $2.50 equals 16.6, which rounds to the nearest whole number as 17. Therefore, the P/E ratio is 17:1.

Suppose You Own Stock in National Advertising Which Had Earnings