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What is the firm price-earnings ratio

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Question - As a shareholder of an oil company, Alice received the company's annual report. In the financial statements, the firm has reported assets of $9 million, liabilities of $5 million, after-tax earnings of $2 million, and 750,000 outstanding shares of common stock.

a. Calculate the book value of a share of this oil company's common stock.

b. Calculate the earnings per share of this oil company's common stock.

c. Assuming that a share of this oil company's common stock has a market value of $40, what is the firm's price-earnings ratio?

Reference no: EM133159820

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