Alberta High Skies Company has net income of $3 million.It issued 500,000 shares two years ago at an issue price of $20 per share, and the shares are now trading at $35 per share.What is Alberta High Skies' price-earnings ratio?
A)1.75
B)3.33
C)5.83
D)9.17

Question

Quizplus · Accepted Answer

First, we need to calculate the earnings per share (EPS):
EPS = Net Income / Number of Shares = $3,000,000 / 500,000 = $6
Then, we can calculate the price-earnings (P/E) ratio:
P/E ratio = Price per Share / EPS = $35 / $6 = 5.83
Therefore, the correct answer is C.

Alberta High Skies Company Has Net Income of $3 Million