The following information is available for Taylor Company: Which of the following statements is correct?
A) The price-earnings ratio is 20 and a share of common stock was selling for 20 times the amount of earnings per share at the end of 2012.
B) The price-earnings ratio is 5.0% and a share of common stock was selling for 5.0% more than the amount of earnings per share at the end of 2012.
C) The price-earnings ratio is 10 and a share of common stock was selling for 125 times the amount of earnings per share at the end of 2012.
D) The market price per share and the earnings per share are not statistically related to each other.

Question

The following information is available for Taylor Company:  Which of the following statements is correct?
A) The price-earnings ratio is 20 and a share of common stock was selling for 20 times the amount of earnings per share at the end of 2012. 
B) The price-earnings ratio is 5.0% and a share of common stock was selling for 5.0% more than the amount of earnings per share at the end of 2012. 
C) The price-earnings ratio is 10 and a share of common stock was selling for 125 times the amount of earnings per share at the end of 2012. 
D) The market price per share and the earnings per share are not statistically related to each other.

Quizplus · Accepted Answer

The given information "TB2013_00_TB2013_00" is not related to the question, so we can ignore it. The price-earnings ratio is calculated by dividing the market price per share by the earnings per share. None of the given options provide the market price per share, but option A states that the price-earnings ratio is 20, which means a share of common stock was selling for 20 times the amount of earnings per share. Therefore, option A is correct.

The Following Information Is Available for Taylor Company: Which