what will be the price-earnings ratio of the company?

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