If there is 48000 in earnings available to common stockholders and the firm's stock has a PE of 20 times earnings per share what is the current price of the stock?

There are two ways to answer this: Short and Long.

First, short:

PE = PPS/EPS ; PE = 20(EPS) as well.

Substituting 20(EPS) for PE gives:

20(EPS) = PPS/EPS ; Multiply EPS on both sides to eliminate the fraction on the right side:

20(EPS)2= PPS

So, Price per share = 20 times Earnings per share2

Long way:

EPS = EAC/#shares ; Since we know EAC, it becomes EPS = 48,000/#shares

Since PE = 20(EPS) using what we got from the short way, we can subsitute the EPS fraction into the left side:

20(48,000/#shares) = PPS/(48,000/#shares) ; Of course we would simplify it a little bit, multiplying 20 and 48,000 and multiplying the inverse of the denominator:

960,000/#shares = PPS * #shares/48,000 ; Multiply 48,000 on both sides and get:

46,080mil/#shares = PPS * #shares ; Multiply #shares on both sides and get:

46,080mil = PPS * #shares2 ; Finally, divide by #shares2 to isolate PPS and you get:

PPS = 46,080mil/#shares2

So, you have PPS = 20(EPS)2 or PPS = 46,080mil/#shares2

Either way, you can't get a number answer because of the lack of data on the number of shares. If we had the number of shares outstanding, it would be pretty easy.

I know it's an old question, but still, if anyone has a better way or a correction to make on what I did, feel free to do so.