Question

A company has an EPS of $3.90, a book value per share of $39.00, and a market/book ratio of 3.0x. What is its P/E ratio

Answer 1

P/R ratio = 30x or 30 times

Step-by-step explanation:

P/E ratio is calculated by dividing the price per share by the earnings per share or EPS

P/E = Price per share / Earnings pet share

M/B = Market value per share/Book value pet share

3.0 = Market price per share / $39

3.0 × $39 = Market price per share

Market price per share = $117.

So, P/E ratio = $117 / $3.9

P/E ratio = 30x or 30 times