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During the year, Lox, Stock and Bagel Inc.'s net income was $60,000. Its average stockholders' equity was $240,000, and it had 120,000 shares outstanding the entire year. Its stock was selling for $10 per share. Its P/E ratio equals ______. The company has no preferred stock. Multiple choice question.

Respuesta :

abiolataiwo2015

Based on the information given its P/E ratio equals: 20.

Using this formula

P/E ratio =Stock selling price per share/(Net income/Shares outstanding)

Where:

Stock selling price per share=$10

Net income=$60,000

Shares outstanding=120,000 shares

Let plug in the formula

P/E ratio =$10/($60,000/120,000)

P/E ratio =$10/0.5

P/E ratio =20

Inconclusion its P/E ratio equals: 20.

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