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21 July, 04:43

Ratzell's Place has a market-to-book ratio of 2.7, net income of $68,400, a book value per share of $37, and 45,000 shares of stock outstanding. What is the price-earnings ratio

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  1. 21 July, 06:02
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    The price-earnings ratio is 66 times

    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.

    Market to book ratio = Market price / Book value

    2.7 = Market price / $37

    Market price = $37 x 2.7 = $99.9

    Earning per share = Net income / Outstanding number of shares

    Earning per share = $68,400 / 45,000 = $1.52 per share

    Price Earning Ratio = Market Price / Earning Per share

    Price Earning Ratio = $99.9 / $1.52

    Price Earning Ratio = 65.7 times = 66 times
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Home » Business » Ratzell's Place has a market-to-book ratio of 2.7, net income of $68,400, a book value per share of $37, and 45,000 shares of stock outstanding. What is the price-earnings ratio
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