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

ACCA Webinars: How to earn marks in Strategic Professional Exams. Learn more >>

20% off BPP Books for ACCA & CIMA exams - Get BPP 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 1 year ago by Aroona.
Viewing 1 post (of 1 total)
  • Author
    Posts
  • May 18, 2021 at 7:43 am #620911
    Aroona
    • Topics: 6
    • Replies: 5
    • ☆

    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

ACCA News:

ACCA Introducing professional skills into the Options exams

ACCA Professional Skills Webinar – Register now

Donate

If you have benefited from OpenTuition please donate.

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Latest comments

  • brayo07 on Using Information Systems – ACCA Performance Management (PM)
  • axel.frederick on Objectives of organisations – ACCA (AFM) lectures
  • julianleong on Foreign exchange risk management (1) Part 7 – ACCA (AFM) lectures
  • RAHUL8877 on Sources of Finance – Debt – ACCA Financial Management (FM)
  • John Moffat on FA Chapter 4 Questions Accruals and Prepayments

Copyright © 2022 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in


We use cookies to show you relevant advertising, find out more: Privacy Policy · Cookie Policy