Thomas Publishing has a share price of $28,retained earnings of $0.60 per share,and a dividend yield of 5 percent.What is its price-earnings ratio?

Question

Quizplus · Accepted Answer

The price-earnings ratio (P/E ratio) is calculated by dividing the share price by the earnings per share (EPS). The dividend yield is 5%, which means the dividend per share is 5% of $28, or $1.40. The retained earnings per share is $0.60, so the total earnings per share is $1.40 + $0.60 = $2.00. The P/E ratio is $28 / $2.00 = 14.

Thomas Publishing Has a Share Price of $28,retained Earnings of $0.60