Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter15: Distributions To Shareholders: Dividends And Repurchases
Section: Chapter Questions
Problem 7MC
Related questions
Question
How do I calculate the price / earnings ratio, earnings per common share, and dividend payout?
Expert Solution
Step 1
Price/ Earnings ratio:
Price Earnings ratio is the ratio of firm’s present share price to its earnings per share. It stretches an idea of what the market is ready to pay for corporation’s earnings. It also specifies in what way the stock is valued in the marketplace.
Step 2
The formula to compute price/earnings ratio as follows:
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