| Earnings per share 47k |
| Dividends per share 30k |
| Per value of each share N1.20 |
| market price per share NM1.50 |
A. N3.91
B. N3.19
C. N2.95
D. N2.55
Correct Answer:
Option B – N3.19
Explanation
Price-earnings ratio, also known as P/E ratio, is a tool that is used by investors to help decide whether they should buy a stock. Essentially, the P/E ratio tells potential investors how much they have to pay for every $1 of earnings. A low P/E ratio is attractive in the sense that one pays less for every $1 of earnings. At the same time, companies with higher P/E ratios generally expect higher earnings growth in the future than companies with low P/Es. it is gotten as:
Price earnings ratio = market value ÷ Earnings per share (EPS)
= 1.5/47K
= 3.19
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