A company has earnings per share of $6.45. Its dividend per share is $0.20, and its market price per share is $80. Its price-earnings ratio equals 12.4.

Question

Quizplus · Accepted Answer

The price-earnings ratio of a company is calculated by dividing the market price per share by the earnings per share. In this case, the price-earnings ratio would be:

PE ratio = Market price per share / Earnings per share
PE ratio = $80 / $6.45
PE ratio = 12.4

Since the given price-earnings ratio matches the calculated price-earnings ratio, the statement is true.

A Company Has Earnings Per Share of $6