A company had a market price of $27.50 per share, earnings per share of $1.25, and dividends per share of $0.40. Its price-earnings ratio equals:
A) 32.0.
B) 3.1.
C) 93.8.
D) 3.3.
E) 22.0.

Question

Quizplus · Accepted Answer

Price-earnings ratio (P/E ratio) is calculated by dividing the market price per share by earnings per share.

P/E ratio = Market price per share / Earnings per share

In this case,

P/E ratio = 27.50 / 1.25 = 22.0

Therefore, the answer is E) 22.0.

A Company Had a Market Price of $27