Question
Calculate P/E Ratio from the following: Equity
share capital @ 10 each : 800000 9% preference share capital: 300000 Β Profit (after 35% tax) : 267000 Β Depreciation: 67000 Market Price of Equity: 48Solution
Earning Per Share = Profit after tax and dividend/Number of equity shares outstanding = (267000- 27000)/ 80000 = 3 P/E Ratio = Price per share / EPS = 48/3 = 16
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