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which of the following shows the earnings per share for a company whose price-to-earnings ratio is 6.75 times and whose common stock is currently selling at $12.50 per share?

Answer :

According to the given information, the earnings per share for a company is 1.8518

Earnings per share = Market price of the stock / price-to-earnings ratio

Earnings per share = $12.50 / 6.75

Earnings per share = 1.8518

  • The term "earnings per share" (EPS) refers to a company's net profit divided by the total number of outstanding common shares.
  • A popular metric for determining corporate value is earnings per share (EPS), which shows how much money a company makes for each share of its stock.
  • A higher EPS denotes greater value because shareholders will pay more for a company's stock if they believe it is making more money than the price of its shares.
  • EPS can be calculated in a number of ways, including on a diluted basis or by excluding unusual items and discontinued operations.
  • Like other financial metrics, earnings per share is most useful when contrasted with similar businesses, companies in the same industry, or over time.

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