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Calculate PE ratio

The company net profit is $200000 for the period2014 and the outstanding shares at the end of2014 is20000. The share price of the company in the market is $50. A.50 B.5 C.10 D.500

Accounting Financial Accounting Financials
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Question added by Vijayabharathi Kalyanasundaram (ACMA - INDIA) , Finance Analyst , shell
Date Posted: 2015/06/15
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Haidar Alali
by Haidar Alali , GL Accountant , National OilWell Varco NOV

The correct answer is option B.  PE Ratio = price per share /  EPS.

EPS = $200000 / $20000 = $10, So  PE = $50 / $10= $5

Vijayabharathi Kalyanasundaram (ACMA - INDIA)

The Answer is $5 (PE ratio) : PE ratio = Marker price per share / Earnings per share

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