SIE practice questionhardP/E Ratio
A company with net income of $2 million and 500,000 shares trades at $80 per share. What is the P/E ratio?
- A25
- B10
- C200
- D20✓ Correct answer
Explanation
Why D — 20
EPS = $2m/500,000 = $4. P/E = $80/$4 = 20. Other answers use incorrect calculations.
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