If a company's P/E ratio is 12.5 and the company's stock price is $17.50 per share then the company's EPS is:
A) $0.71.
B) $1.40.
C) $5.00.
D) $0.40.

Question

Quizplus · Accepted Answer

The formula for P/E ratio is P/E = Price per share / Earnings per share. Given P/E ratio is 12.5 and stock price is $17.50, we can find earnings per share as:

P/E = 12.5 
Price per share = $17.50 
Earnings per share = Price per share / P/E 
Earnings per share = $17.50 / 12.5 
Earnings per share = $1.40

Therefore, the EPS is $1.40.

If a Company's P/E Ratio Is 12