Today the company announces net income equals $51 million. They have 20 million shares outstanding, and...

Today the company announces net income equals $51 million. They have 20 million shares outstanding, and today’s share price is $94.86 . Find the company’s price-to-earnings ratio.

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/\a. 40.9 b. 30.7 c. 33.8 d. 37.2 e. 45.0

Expert Solution

ANSWER IS 37.2

WORKING NOTE

HERE THE GIVEN INFORMATIONS ARE

NET INCOME OF THE COMPANY = $51000000

OUT STANDING SHARES = $20000000

CUREENT MARKET PRICE OF SHARE =$94.86

FORMULA TO FIND OUT PRICE TO EARNING RATIO

P/E RATIO = MARKET VALUE PER SHARE / EARNINGS PER SHARE

= $94.86 / $ 2.55

= 37.2

EARNINGS PER SHARE = NET INCOME OF THE COMPANY / OUTSTANDING SHARES OF THE COMPANY

= $51000000 / $20000000

= $2.55

jeff jeffy answered 2 years ago

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