Market-value ratio: RTR Corp. has reported a net income of $812,425 for the year. The company's share price is $13.45, and the company has 312,490 shares outstanding. Compute the firm's price-earnings ratio.

Question

Quizplus · Accepted Answer

First, we need to calculate the market value of RTR Corp. by multiplying the share price by the number of outstanding shares:

Market value = $13.45 x 312,490 = $4,204,310.50

Then, we can calculate the price-earnings ratio (P/E ratio) by dividing the market value by the net income:

P/E ratio = Market value / Net income = $4,204,310.50 / $812,425 = 5.17 times

Therefore, the correct answer is C) 5.17 times.

Market-Value Ratio: RTR Corp