• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for September 2025 exams.
Get your discount code >>

Please help me regarding PE ratio , if anybody knows the answer

Forums › ACCA Forums › ACCA FM Financial Management Forums › Please help me regarding PE ratio , if anybody knows the answer

  • This topic has 0 replies, 1 voice, and was last updated 4 years ago by Aroona.
Viewing 1 post (of 1 total)
  • Author
    Posts
  • May 18, 2021 at 7:43 am #620911
    Aroona
    Member
    • Topics: 8
    • Replies: 7
    • ☆

    The shares of Fencer plc are currently valued on a P/E ratio of 8. The company is
    considering a takeover bid for Seed Limited, but the shareholders of Seed have indicated
    that they would not accept an offer unless it values their shares on a P/E multiple of at
    least 10.
    Which TWO of the following are reasons which might justify an offer by Fencer plc for the
    shares of Seed on a higher P/E multiple?
    A Fencer has better growth prospects than Seed
    B Seed has better-quality assets than Fencer
    C Seed has a higher gearing ratio than Fencer
    D Seed is in a different country from Fencer, where average P/E ratios are higher
    and the answer is B and D

    My question is if Seed has a higher gearing ratio than fencer,it means it has more debt and that means the EPS decreases and since EPS is the denominator of PE ratio, PE increases?Is this logic right?if its right why isnt C the right answer

  • Author
    Posts
Viewing 1 post (of 1 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

Donate
If you have benefited from our materials, please donate

ACCA News:

ACCA My Exam Performance for non-variant

Applied Skills exams is available NOW

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

ACCA CBE 2025 Exams

How was your exam, and what was the exam result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Donate

If you have benefited from OpenTuition please donate.

PQ Magazine

Latest Comments

  • umangkumbhat on What is Assurance? – ACCA Audit and Assurance (AA)
  • ahmadhoney on How to register with ACCA?
  • John Moffat on Interest rate risk management (1) Part 5 – ACCA (AFM) lectures
  • osman-the-zephyr@ on MA Chapter 1 Questions Accounting for Management
  • adebusola on MA Chapter 1 Questions Accounting for Management

Copyright © 2025 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in