If the market share price is $20 and the earnings per share is calculated to be $2.50,the price earnings ratio is:
A) 4 times.
B) 5 times.
C) 8 times.
D) 12.5 times.

Question

Quizplus · Accepted Answer

The price earnings ratio (P/E ratio) can be calculated by dividing the market share price by the earnings per share. 
P/E ratio = Market share price / Earnings per share
In this case, 
P/E ratio = $20 / $2.50
P/E ratio = 8 
Therefore, the correct answer is C) 8 times.

If the Market Share Price Is $20 and the Earnings