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Stout Corporation had net income of $200,000 and paid dividends to common stockholders of $40,000 in 2012. The weighted average number of shares outstanding in 2012 was 50,000 shares. Stout Corporation's common stock is selling for $75 per share on the New York Stock Exchange. Stout Corporation's price-earnings ratio is Group of answer choices

Respuesta :

Answer:

18.75

Explanation:

The computation of the price-earning ratio is given below:

We know that

Price-Earning Ratio = Price Per Share ÷  Earning Per Share

Earning Per Share = Net Earnings ÷ Outstanding Shares

So,  

Price-Earning Ratio = Price Per Share ÷ (Net Earnings ÷ Outstanding Shares)

= $75 ÷ ($200,000 ÷ 50,000)

= 75 ÷ 4

= 18.75

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