Amuzon Corp. is currently selling for $30/share and recently reported annual earnings of $2 million, 1 million shares outstanding, and forecasted earnings/share of $2.50 next year. Amuzon Corp.'s trailing P/E ratio is:
A) 15
B) 12
C) 30
D) 6.67%

Question

Quizplus · Accepted Answer

The trailing P/E ratio is calculated by dividing the current share price by the earnings per share (EPS) over the past 12 months. With Amuzon Corp.'s share price at $30 and annual earnings of $2 million divided by 1 million shares outstanding, the EPS is $2. Therefore, the trailing P/E ratio is $30/$2 = 15.