ABC Inc. has net income of $41,600 and total equity of 4381,000. The firm has 60,000 shares of stock outstanding at a price of $14.20 a share. What is the firm's P/E ratio?

Question

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The P/E ratio is calculated by dividing the market value per share by the earnings per share (EPS). First, calculate the EPS: EPS = Net Income / Shares Outstanding = $41,600 / 60,000 = $0.6933 per share. Then, calculate the P/E ratio: P/E Ratio = Price per Share / EPS = $14.20 / $0.6933 ≈ 20.48.

ABC Inc Has Net Income of $41,600 and Total Equity of of 4381,000