1. avatar says

    Hi John,

    I’m bit confused about P/E ratio, in your lecture, p/e=market value per share/earning per share, and earning per share=earnings for ordinary shares/number of ordinary shares. Dec 2012, Q4, a) iii) I calculate that earning per share is 10.1/40=0.2525, so p/e ratio is 4/0.2525=15.84. I cannot understand examiner’s answer, average p/e ratio x earnings, what’s that mean, what this figure tells me? Thanks.

    • Profile photo of John Moffat says

      PE = market value / earnings
      If you multiply both sides by earnings, you get market value = PE x earnings

      The question asks you for a market value and specifically says to use the business sector average PE ratio.

      The company is being considered for acquisition, if you were thinking of buying it then this is one way that you might decide how much it was worth paying for the shares.

  2. Profile photo of aishaasad says

    hello Sir ,
    while calculating interest cover how does interst cover comes out to be 5.45 mine comes out to be 54.54 when i divide 6000 by 110 plz explain may be i am getting confused with zeros
    Thanks in advance.

    • Profile photo of John Moffat says

      Yes! There is more than enough in the lectures and Course Notes to be able to pass the exam well.
      However the one extra thing that you do need to do is to practice as many questions as possible. My lectures and notes can teach you what you need to know, but the only way that you can get used to the style of the exam and the level of difficulty is to practice questions.
      At the very least you must work through all the past exam questions from the ACCA website. Better is to get hold of a Revision/Exam Kit from one of the approved publishers because they have lots of extra questions also.

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