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27 December, 06:48

NY News has net earnings per share of $3.24, a book value per share of $22, and a market-to-book ratio of 2.5. What is the price-earnings (PE) ratio?

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  1. 27 December, 10:43
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    Price earning ratio is 16.98 times

    Explanation:

    Earning per share = $3.24 per share

    Book value = $22 per share

    Market-to-book ratio = 2.5

    Market to book ratio = Market price of share / book price of share

    2.50 = Market price of share / 22

    Market price of share = $22 x 2.5

    Market price of share = $55

    Price earning rartio = Market price / Earning per share

    Price earning rartio = $55 / $3.24 = 16.98 times
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