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2016MJ Q2: (b) P/E ratio calculations

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › 2016MJ Q2: (b) P/E ratio calculations

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  • May 26, 2021 at 10:07 pm #621869
    amysnowy
    Member
    • Topics: 71
    • Replies: 25
    • ☆☆

    Dear Tutor

    why EPS of Tidded Co is remaining unchanged when implies different offers? is it because regardless which offer to be accepted, PAT and no of shares are still remain the same, only cash flow increased? but for L Co, EPS will be impact by cash offer or share for share

    thanks

    May 27, 2021 at 8:00 am #621882
    John Moffat
    Keymaster
    • Topics: 57
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    Tidded will not longer exist after it is taken over.

    The PE ratios are, as always, the market value divided by the current EPS. Before the takeover the EPS of Tidded was $1.42. Different takeover values (i.e. the amount being paid per share) give different PE ratios.

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