Verne Corporation has sales of $90952, net income of $788170, total assets of $2039191, and 90952 shares of common stock outstanding. If Verne’s P/E ratio is 11, what is the company's current stock price?
Financial Ratios
A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.
Return on Equity
The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.
Verne Corporation has sales of $90952, net income of $788170, total assets of $2039191, and 90952 shares of common stock outstanding. If Verne’s P/E ratio is 11, what is the company's current stock price?
Importance of P/E Ratio
By comparing a stock's price to its earnings, investors can use the P/E ratio to assess if it is overvalued or undervalued. The ratio serves as a gauge of what the market will pay for the company's existing operations and potential future growth. A high P/E ratio indicates that the market is confident in a company's ability to expand and is ready to invest potentially excessive amounts of money now in order to capitalize on that potential.
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
