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6 June, 08:28

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

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  1. 6 June, 10:21
    0
    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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