Last year, Hi-Lo Electronics earned $2.50 per share.If the current market value for a share of stock is $55, what is the firm's PE ratio?
A)0.025
B)2.5
C)22
D)55
E)It is impossible to calculate a PE ratio with this information.

Question

Quizplus · Accepted Answer

PE ratio (price-to-earnings ratio) = Market value per share / Earnings per share
PE ratio = ($55 per share) / ($2.50 per share) = 22. Therefore, the answer is C.

Last Year, Hi-Lo Electronics Earned $2