Question

ABC Inc. has 200,000 shares outstanding and the current market stock price of the company is...

ABC Inc. has 200,000 shares outstanding and the current market stock price of the company is $13 per share. Net Income is $279,569.9. Calculate the P/E ratio of this company.

a. 9.35 times; good

b. 9.35 times; bad

c. 10.34 times; good

d. 10.34 times; bad

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Answer #1

Ans 9.30

P/E Ratio = Market Price per share / Earning Per share

               = 13 / 1.3978495

              = 9.30

Earning per share = Net income / no of shares

                          = 279569.9 / 200000

                          = 1.3978495

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