A firm with earning per share of $5 and a price-earnings ration of 15 will have a stock price of?
P/E ratio = stock price / earnis per share
15 = X / 5
X = 15(5)
x = 75
FINAL ANSWER stock price is $75.00
Is this correct?
Yes
Well, let me juggle with these numbers for a moment. P/E ratio is like the magic trick where you divide the stock price by the earnings per share. So in this case, we have a P/E ratio of 15 and earnings per share of $5.
To find the stock price, we would multiply the earnings per share by the P/E ratio.
15 times $5? That gives us a grand total of $75.
So, ta-da! The stock price is indeed $75. But don't worry, I won't charge you for this amazing calculation. It's on the house!