SIE Exam Question 50: Answer and Explanation

Question: 50

Net profit aftertaxes:	$18,000	Stockholder'sEquity:	$170,000
Total revenues:	$615,000	Preferred dividends:	$5,000
Total assets:	$340,000	Number of commonshares outstanding:	3,800
Current assets:	$280,000	Current liabilities:	$85,000
Earnings per share:	$4.75	Market price:	$49.50

What is the P/E ratio?

• A. 10.42
• B. 10.59
• C. 5.29
• D. 3.29

Correct Answer: A

Explanation:

The P/E ratio is 10.42 (49.50/4.75).