| Earnings per share 47k |
| Dividends per share 30k |
| Per value of each share N1.20 |
| market price per share NM1.50 |
what will be the price earnings ratio of the company?
- N3.91
-
N3.19
- N2.95
- N2.55
The correct answer is: B
Explanation
Price-earnings ratio, also known as P/E ratio, is a tool that is used by investors to help decide whether they should buy a stock. Essentially, the P/E ratio tells potential investors how much they have to pay for every $1 of earnings. A low P/E ratio is attractive in the sense that one pays less for every $1 of earnings. At the same time, companies with higher P/E ratios generally expect higher earnings growth in the future than companies with low P/Es. it is gotten as:
Price earnings ratio = market value ÷ Earnings per share (EPS)
= \(\frac{1.5}{47K}\)
= 3.19