The dividend payout ratio tells us what amount of the company's earnings per share are distributed as dividends. Since the dividend payout ratio is 40% and the dividend was $2, we can conclude that earnings per share was $5 ($2 ÷ .4 = $5). The price earnings ratio is calculated as the market price of the stock divided by the earnings per share. The market price is $20 and the EPS was $5, giving a price earnings ratio of 4.
This answer results from dividing the earnings per share by the dividend per share. The price to earnings ratio is the price of a share divided by the earnings per share.
This is the price of a share multiplied by the earnings per share. The price to earnings ratio is the price of a share divided by the earnings per share.
This is the share price divided by the dividend per share. The price to earnings ratio is the price of a share divided by the earnings per share. The earnings per share must be calculated, using the amount of the dividend per share and the dividend payout ratio.
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