Question

A dearborn company has earning per share of $2.30, it paid a dividend of $1.60 per share, and the market price of the company's stock is $64 per share. The price/earnings ratio is closest to:_______

a. 1.29
b. 91.43
c. 20.65
d. 9.60

Answer 1

Price -earnings ratio= 27.83 times

Step-by-step explanation:

The price-earning ratio is the ratio of the market price of a share to its earnings per share .

It helps investors to place a value on the shares of a company.The ratio gives an idea of how much a dollar of earning is worth in a company.

It is calculate as follows:

Price-Earnings ratio = Market price per share(MPS)/Earnings per share(EPS)

Price-earnings ratio = 64/2.30=27.83

Price -earnings ratio= 27.83 times