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CorpCo gathered the following information as of the end of the current fiscal year:
Dividends on common stock $125,000
Market price per share of common stock $115
Shares of common stock outstanding 5,000
Dividends on preferred stock $65,000
Shares of preferred stock outstanding 600
Earnings per share on common stock $102
Dividends per share of common stock $25
Net income $575,000

What is CorpCo's price-earnings ratio? Round your answer to one decimal place

Respuesta :

Answer:

CorpCo's price-earnings ratio is 1.1 times

Explanation:

For computing the price earning ratio, we need to use the formula which is shown below:

Price-earnings ratio = (Market price per share) ÷ (Earning per share)

= $115 ÷ $102

= 1.1 times

In the price earning ratio, we take the market price per share in the numerator side and the earning per share in the denominator side. It shows a relationship between the market price per share or company share and the earning per share

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