MCQ QUESTION WORKING

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May 27, 2015 at 8:26 am #249457
ritesh1990
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X PLC HAS DIVIDEND YIELD OF 8% AND DIVIDEND COVER OF 2.4

WHAT IS PER RATIO FOR X PLC?
May 27, 2015 at 9:19 am #249492
John Moffat
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Please do not write in capital letters.

Divi yield = divi / MV; so MV = divi / divi yield
Divi cover = EPS / divi; so EPS = divi x divi cover

PE ratio = MV / EPS = (divi / divi yield) / (divi x divi cover)

= (1/divi yield) / divi cover

= (1/0.08) / 2.4 = 5.21
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