A company has 15,000 shares of stock outstanding, a net income of $68,000, and a stock price of $73.25. What is the price-earnings ratio?

Question

Quizplus · Accepted Answer

The price-earnings ratio (P/E ratio) is calculated by dividing the market value per share by the earnings per share (EPS). First, calculate the EPS by dividing the net income by the number of shares outstanding: $68,000 / 15,000 = $4.5333 per share. Then, calculate the P/E ratio by dividing the stock price by the EPS: $73.25 / $4.5333 ≈ 16.16.

A Company Has 15,000 Shares of Stock Outstanding, a Net