Question

g You own shares of a company that reported after-tax earnings of $29 million and has issued 2 million shares of stock. The company's stock price is $5.09 per share. Calculate the company's price-earnings (PE) ratio.

Answer 1

Answer: 0.35

Step-by-step explanation:

The Price to Earnings ratio is used to value companies and is calculated by dividing the company's stock price by its earnings per share.

Earnings per share = 29,000,000/2,000,000 shares

= $14.50

PE ratio = Share price / Earnings per share

= 5.09/14.50

= 0.35