CMA Study Group

  • 1.  Hey all,

    Posted 12 days ago
    Hey all,
    It would be great if I would get my doubt cleared.

    Q. The common stock of company has market price of 36. The company has 50million common shares outstanding and net income of 200 million. At the end of fiscal year, the company declared common dividends of $1 per share. What is price/earnings ratio.

    Now my doubt is that is the answer 12 or 9
    Bcozhere  they have deducted the common dividends amount from net income and then divided it by no. Of shares to getearnings per share. But dividends is also part of earnings so why should we deduct it?


    Keerthi Shankar