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9 October, 20:54

CorpCo gathered the following information at the end of the current fiscal year:

Dividends on common stock $125,000

Market price per share of common stock $115.00

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 $102.00

Dividends per share of common stock $25.00

Net income $575,000

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

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  1. 9 October, 21:17
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    Price-earnings ratio = Market price per share/Earnings per share

    = $115/$102

    = 1.1

    Explanation:

    Price-earnings ratio is the ratio of market price per share to earnings per share. Market price per share = $115 and earnings per share = $102.

    The division of market price per share by earnings per share gives price-earnings ratio.
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