Data concerning Bouerneuf Company's common stock follow: The price-earnings ratio would be
A) 2.0.
B) 2.7.
C) 3.0.
D) 4.0.

Question

Data concerning Bouerneuf Company's common stock follow:  The price-earnings ratio would be
A) 2.0. 
B) 2.7. 
C) 3.0. 
D) 4.0.

Quizplus · Accepted Answer

To calculate the price-earnings ratio (P/E), we need to divide the current stock price by the earnings per share (EPS).

P/E ratio = Current stock price / EPS

From the given data, we have:

Current stock price = $45 
EPS = $15

Therefore, the P/E ratio = $45 / $15 = 3

Hence, the best choice is C) 3.0 as it represents the correct calculation of the price-earnings ratio.

Data Concerning Bouerneuf Company's Common Stock Follow: the Price-Earnings