Question

MRA, Inc. showed a profit of $15,750,000 last year and 20,000,000 outstanding shares of stock. The company's price per share at the end of the year was $10.95 per share. What was the Price to Earnings Ratio (P/E) of MRA, Inc.?

Answer 1

The formula for Price to Earnings Ratio is the price per share divided by the earnings per share. We are given the price per share as $10.95 and can calculate that the earnings per share is equal to $15,750,000 divided by 20,000,000, which is 78.75 cents. Thus, the P/E Ratio is 13.9.