Question

A company has an eps of $2.40 a book value per share of 21.84 and amarket book value of 2.7x. What is its P/E ratio?

Answer 1

P/E Ratio: 24.57

Step-by-step explanation:

Price earning ratio is the ratio of price of share of a company to its earning per share.

P/E ratio denotes the price paid by a shareholder for its each dollar of earning per share e.g. how much price shareholders are willing to pay for each dollar of earning per share of a company.

P/E ratio: Price per share / Earning per share

Price per share = Book value * multiple

Price per share = 21.84 * 2.7x

Price per share = $58.97 per share

P/E Ratio 58.97 / 2.4

P/E Ratio = 24.57