A company reported $960,000 in net income for the current year. Total weighted-average common shares outstanding are 150,000 shares, and the year-end market price is $67.20 per common share. Calculate the company's price earnings ratio.
What will be an ideal response?
Price-Earnings Ratio = Market Price per Share/ (Net Income/Weighted-Average
Common Shares Outstanding)
Price-Earnings Ratio = $67.20/ ($960,000/150,000 shares) = 10.5
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