The Hi-Lite Corp. had a profitable year and their ROE was 14.4%. The company paid out $1.20 of their earnings of $3.00 for the year. The market price of their stock at year end was $28. What was Hi-Lite's price-earnings ratio?
A) 23.33.
B) 9.33.
C) 4.03.
D) 12.10.

Question

Quizplus · Accepted Answer

The price-earnings (P/E) ratio is calculated by dividing the market price per share by the earnings per share (EPS). Here, EPS = $3.00, and the market price = $28. So, P/E ratio = $28 / $3.00 = 9.33.