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Question: Suppose the EPS of Wal-Mart stock was $2 and the current price per earnings ratio is 10. What is the current price of Wal-Mart stock? The price/earnings ratio (P/E) is calculated as A) stock price divided by earnings per share B) stock price times earnings per share C) earnings per share divided by stock price D) stock price divided by the difference between earnings per share and cash dividends per share What may be the problem with comparing the P/E of stock to the P/E of the overall market?

Question: Suppose the EPS of Wal-Mart stock was $2 and the current price per earnings ratio is 10. What is the current price of Wal-Mart stock? The price/earnings ratio (P/E) is calculated as A) stock price divided by earnings per share B) stock price times earnings per share C) earnings per share divided by stock price D) stock price divided by the difference between earnings per share and cash dividends per share What may be the problem with comparing the P/E of stock to the P/E of the overall market?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question: Suppose the EPS of Wal-Mart stock was $2 and the current price per earnings ratio is 10. What is the current price of Wal-Mart stock? The price/earnings ratio (P/E) is calculated as A) stock price divided by earnings per share B) stock price times earnings per share C) earnings per share divided by stock price D) stock price divided by the difference between earnings per share and cash dividends per share What may be the problem with comparing the P/E of stock to the P/E of the overall market?
Transcribed Image Text:Question: Suppose the EPS of Wal-Mart stock was $2 and the current price per earnings ratio is 10. What is the current price of Wal-Mart stock? The price/earnings ratio (P/E) is calculated as A) stock price divided by earnings per share B) stock price times earnings per share C) earnings per share divided by stock price D) stock price divided by the difference between earnings per share and cash dividends per share What may be the problem with comparing the P/E of stock to the P/E of the overall market?
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