Question

24 : If a company's earnings per share is $20 and it
has a share price of $600, what is the P/E ratio?
40
30
50
20​

Answer 1

Answer:

hmmmmm....

..

.

............

Answer 2

Concept

The price-earnings ratio, sometimes referred to as the P/E ratio, P/E, or PER, measures how much a firm charges for its shares to how much it earns per share. When appraising businesses, the ratio is used to determine whether they are overpriced or undervalued.

Given

Company's earnings per share is $20 and it has a share price of $600 is given

Find

We have to find price-earnings ratio (P/E) of the company

Solution

The steps are as follow:

Let,

P = Share price of company = $600

E = Earning per share = $20

So the price-earnings ratio (P/E) is given by following formula:

Price-earnings ratio = P/E = Share price of company/Earning per share

P/E = 600/20

P/E = 30

Hence the  price-earnings ratio (P/E) of the company having company's earnings per share is $20 and has a share price of $600 will be 30

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