Question

The Dahlia Flower Company has earnings of $2.00 per share. The benchmark PE for the company is 13. What stock price would you consider appropriate?

Answer 1

To determine the appropriate stock price, calculate the P/E ratio by dividing the stock price by the earnings per share. In this case, the stock price would be $26.00.

Step-by-step explanation:

To determine the appropriate stock price for The Dahlia Flower Company, we need to calculate the Price-to-Earnings (P/E) ratio. The P/E ratio is calculated by dividing the stock price by the earnings per share (EPS). In this case, the earnings per share is $2.00 and the benchmark P/E ratio is 13.

Therefore, the stock price would be:

Stock Price = EPS x P/E ratio
Stock Price = $2.00 x 13
Stock Price = $26.00

Thus, a stock price of $26.00 would be considered appropriate for The Dahlia Flower Company.