Multiple Choice
If Smith Corporation reported a net income of \$500,000 for the trailing 12 months and has 100,000 weighted average common shares outstanding, what is Smith’s earnings per share (EPS) for the period?
14. Financial Statement Analysis
Ratios: Earnings Per Share (EPS)
Multiple Choice
JPMorgan Chase (JPM) has earnings per share (EPS) of \$3.75 and a price-to-earnings (P/E) ratio of 47. What is the current stock price?
A
\$12.53
B
\$43.25
C
\$176.25
D
\$125.00
Verified step by step guidance1
Understand the relationship between the Price-to-Earnings (P/E) ratio, Earnings Per Share (EPS), and the stock price. The formula to calculate the stock price is: Stock Price = EPS × P/E Ratio.
Identify the given values in the problem: EPS = \$3.75 and P/E Ratio = 47.
Substitute the given values into the formula: Stock Price = 3.75 × 47.
Perform the multiplication operation to find the stock price. Ensure accuracy in calculation.
Verify the calculated stock price against the provided options to confirm the correct answer.
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