Presented below are selected data from the financial statements of Korn Corp.for Year 2 and Year 1. The price-earnings ratio for Year 2 is

A) 1.09.
B) 5.46.
C) 6.0.
D) 11.0.

Question

Presented below are selected data from the financial statements of Korn Corp.for Year 2 and Year 1. The price-earnings ratio for Year 2 is

A) 1.09. 
B) 5.46. 
C) 6.0. 
D) 11.0.

Quizplus · Accepted Answer

Price-earnings ratio (P/E ratio) = Market price per share / Earnings per share
For Year 2:
P/E ratio = 27.00 / 4.50 = 6.0
Therefore, the best choice is C, with a P/E ratio of 6.0.

Presented Below Are Selected Data from the Financial Statements of Korn