Dooley Corporation had net income of $200,000 and paid dividends to ordinary shareholders of $40,000 in 2011.The weighted average number of shares outstanding in 2011 was 50,000 shares.Dooley Corporation's ordinary shares are selling for $50 per share on the New York Stock Exchange.Dooley Corporation's price-earnings ratio is

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The price-earnings ratio is calculated as the market price per share divided by the earnings per share (EPS). EPS is calculated as net income divided by the weighted average number of shares outstanding. Here, EPS = $200,000 / 50,000 = $4. The price-earnings ratio = $50 / $4 = 12.5 times.

Dooley Corporation Had Net Income of $200,000 and Paid Dividends