A share has a market price of KSh 200 and earnings per share of KSh 16. What is its price-earnings ratio?
Answer and explanation
Correct answer: A. 12.5 times
- Step 1: P/E ratio = market price per share / earnings per share. Step 2. = 200 / 16 = 12.5 times. Answer: 12.5 times. Why not the others: 0.08 times: That is the earnings yield expressed as a fraction. 184 times: That subtracts instead of dividing. 3,200 times: That multiplies instead of dividing.
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