Multiple Choice
A stock quote shows a P/E of 18. How is the Price-Earnings (P/E) ratio defined?
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MoneyCo had sales revenue and net income during the current year of \$500,000 and \$60,000, respectively. The total amount of stockholders' equity was \$600,000, and common shares outstanding were 120,000 all year. If the market price of the stock is \$10, what is the P/E ratio?
Tougher Company's current year income statement showed an EPS of \$1.25 per share. If total common equity totaled \$600,000 (40,000 common shares), preferred dividends were \$10,000 (10,000 preferred shares), and the market price of common and preferred stock are \$25 and \$50, respectively, what is the company's P/E ratio?