Question

Using the information given here, what is the price-earings ratio for DEF Company? (Hint: This is a two-step calculation) (Round your answer to 2 decimal places.)

Income = $270,000
Number of shares outstanding = 45,000
Price per share = $50.40
Book value per share = $5

Answer 1

Earning per share= 270,000/ 45,000= $6

Price earning ratio= 50.40 / 6

8.4 times

Step-by-step explanation:

Price earning ratio= Market price per share/ earnings per share