Queen City Sausage stock is selling at $40 per share. It has retained earnings of $2.00 per share, and dividends of $0.50 per share. What is the price-earnings ratio?

Question

Quizplus · Accepted Answer

The price-earnings ratio is calculated by dividing the stock price by the earnings per share. In this case, the stock price is $40 and the earnings per share are $2.00, so the price-earnings ratio is $40/$2.00 = 20.

Queen City Sausage Stock Is Selling at $40 Per Share