Ask Question
19 January, 17:12

Knowledge Check 01 During the current year, Armstrong Corporation reported net income of $18 million and EPS of $5.00 per share. The average number of common shares outstanding during the year was 3.6 million. The price of a share of its common stock was $2.50 at the beginning of the year and $5.00 at the end of the year. What is the company's price/earnings (P/E) ratio at the end of the year?

+3
Answers (2)
  1. 19 January, 17:50
    0
    P/E = 1

    Explanation:

    The price earnings (P/E) can be used to determine the value of a stock, The ratio relates the price of a stock to its earning. A stock with a higher P/R indicates a high potent for growth.

    The price earning ratio is computed as follows:

    P/E = price per share/EPS

    P/E = 5/5 = 1
  2. 19 January, 18:48
    0
    PE ratio is 1

    Explanation:

    Price earning ratio determines the ratio of price of a share by the earning per share. It measures the times value which a investor pays for each $1 earning of the shares.

    To calculate the price earning ratio at the end of the year, we will use the price of the share at the end of the year.

    Price Earning Ratio = Market Price / Earning Per share

    Price Earning Ratio = $5 / $5

    Price Earning Ratio = 1 times
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “Knowledge Check 01 During the current year, Armstrong Corporation reported net income of $18 million and EPS of $5.00 per share. The ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers