Investor ratios

This topic has 1 reply, 2 voices, and was last updated 8 years ago by John Moffat.

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May 10, 2018 at 6:46 pm #451107
rj87coulson
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Hi,

I am a little confused at how you have calculated the share price in example 1 in Chapter 4. I follow the rest of the workings okay- I just cannot seem to work back to the share prices you have given in the answer.

Any pointers would be great, thanks.
May 11, 2018 at 6:32 am #451165
John Moffat
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I have used the PE ratio. The PE ratio is the market value per share divided by the earnings per share.
Therefore the MV = PR ratio x EPs

In Year 1, the earnings per share are 5,100/9000.
Therefore the MV = 17.0 x 5,100/9,000 = $9.63
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