Presented below are selected data from the financial statements of Korn Corp. for 2014 and 2013. $\begin{array}{lrr}&2014&2013\
\text { Net income } & \$ 100,000 & \$ 123,000 \
\text { Weighted average number of common shares outstanding } & 105,000 & 95,000 \
\text { Market price per share of common stock at the end of the year } & \$ 12.00 & \$ 10.00 \
\text { Earnings per share } & \$ 2.00 & \$ 1.83
\end{array}$ The price-earnings ratio for 2014 is
A) 1.09.
B) 5.46.
C) 6.0.
D) 11.0.

Question

Quizplus · Accepted Answer

The price-earnings (P/E) ratio is calculated by dividing the market price per share by the earnings per share (EPS). For 2014, the market price per share is $12.00 and the EPS is $2.00, so the P/E ratio is $12.00 / $2.00 = 6.0.

Presented Below Are Selected Data from the Financial Statements of Korn