P/E ratio industry average formula june 2009

This topic has 1 reply, 2 voices, and was last updated 9 years ago by John Moffat.

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June 5, 2016 at 12:55 pm #319597
josy87
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Sir is the formula divided multiplied by eps or dividend per share. cause i saw dividen per share in another exam but here is eps
The price/earnings ratio of KFP Co is eight times
) Calculate the total value of the target company, NGN, using the following valuation methods:
(i) Price/earnings ratio method, using the price/earnings ratio of KFP Co; and
the answer
I got
Price/earnings ratio method
Earnings per share of NGN = 80c per share
Price/earnings ratio of KFP Co = 8
Share price of NGN = 80 x 8 = 640c or $6·40
I did, 80*45%+= 36 then 8*36
June 5, 2016 at 1:28 pm #319612
John Moffat
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The PE ratio is the market value per share divided by the earnings per share. It is never any different.
Therefore MV per share = PE ratio x EPS = 8 x 80c = 640c.
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