BVI Corporation had net income of $1,600,000 and paid dividends to common stockholders of $400,000 in 2022.The weighted-average number of shares outstanding in 2022 was 500,000 shares.BVI Corporation's common stock is selling for $40 per share on the NASDAQ.BVI Corporation's price-earnings ratio is

Question

Quizplus · Accepted Answer

To calculate the price-earnings ratio, we need to divide the current market price per share by the earnings per share (EPS).
EPS = Net Income / Weighted-average number of shares outstanding
EPS = $1,600,000 / 500,000 = $3.20 per share
Now, we can calculate the price-earnings ratio:
Price-earnings ratio = Market Price per Share / EPS
Price-earnings ratio = $40 / $3.20 = 12.5 times
Therefore, the answer is B, 12.5 times.

BVI Corporation Had Net Income of $1,600,000 and Paid Dividends