Question

The price-to-earnings ratio (P/E ratio) compares a company’s common stock price with its earnings per share. If a company’s stock is selling at $45 per share and the company is earning $5 per share, then the company’s P/E Ratio is:

a. 8.5
b. 9
c. 10
d. 11

Answer 1

The company's P/E ratio is 9.

Step-by-step explanation:

The price-to-earnings ratio (P/E ratio) is a financial metric that compares a company's stock price with its earnings per share. It is calculated by dividing the stock price by the earnings per share. In this case, the stock price is $45 per share and the earnings per share is $5, so the P/E ratio would be 9 ($45 / $5 = 9).