A company has earnings per share net income of $90,000;its weighted-average common shares outstanding are 18,000.Its dividend per share is $0.45,its market price per share is $88,and its book value per share is $76.Its price-earnings ratio equals:
A)9.0.
B)17.6.
C)12.5.
D)15.2.
E)16.9.

Question

Quizplus · Accepted Answer

First, we need to calculate the earnings per share (EPS) by dividing net income by average shares outstanding:
EPS = $90,000 / 18,000 = $5
Next, we can calculate the price-earnings (P/E) ratio by dividing the market price per share by the EPS:
P/E ratio = $88 / $5 = 17.6
Therefore, the answer is B: 17.6.

A Company Has Earnings Per Share Net Income of $90,000;its