Question

Calculator Robert Corporation had net income of $237,510 and paid dividends to common stockholders of $49,600. They had 52,200 shares of common stock outstanding during the entire year. Robert Corporation's common stock is selling for $58 per share on the New York Stock Exchange. Determine Robert Corporation's price-earnings ratio (Round to two decimal places). Select the correct answer. 4.55 times 12.75 times 1.00 times 16.00 times

Answer 1

12.75 times

Step-by-step explanation:

The formula and the computation are shown below:

Price-earnings ratio = (Market price per share) ÷ (Earning per share)

where,

Earning per share would be

= (Net income) ÷ (Outstanding Number of shares)

= ($237,510) ÷ (52,200 shares)

= $4.55

And, the market price per share is $58

Now put these values to the above formula

So, the ratio would equal to

= $58 ÷ 4.55

= 12.75 times