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The Market Price of Sanji's Paper Inc

Question 122

Essay

The market price of Sanji's Paper Inc.'s common shares was $50 per share as quoted in today's Globe and Mail. Earnings per share were $5.
Instructions
Calculate the price-earnings ratio for Sanji. If the price-earnings ratio is high, what can the ratio mean?

Correct Answer:

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Price-earnings ratio = $50 ÷ $5 = 10
The...

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