Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Q4 December 2014
- This topic has 1 reply, 2 voices, and was last updated 8 years ago by John Moffat.
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- May 6, 2015 at 3:01 pm #244356
Hi John,
Please clarify whether such a comment would gain a couple of marks:
Estimation of MV of shares based on the Market PE ratios:
2012: (9,2*463)/(750/0,25)= 1,42 correspondingly 2013: 1.95 & 2014: 3.17
At that, market values of shares per Q: 2012-1.69; 2013-2.01; 2014-2.69;
Thus, the shares were appreciated by investors in 2012&2013 due to high PE ratios, though in 2014 market price was below the value estimated by the market average PE which indicates loss of interest of investors.Or perhaps, it’d be better like the examiner did – just to compare the PEs without calculation of share prices based on market average PEs.
Perhaps, calculation of market values based on market average PEs and earnings are more relevant for questions involved in acquisitions (i.e. to assess whether the shares are overvalues or not).
Thank you in advance.
May 6, 2015 at 3:16 pm #244362What you have written is fine (although as you say, you didn’t actually need to calculate share prices – but you would still get the marks.)
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