Ask Question
BusinessBusiness
22 October, 17:15

Firm A has earnings-per-share of $3.00. Firm B has earnings-per-share of $2 and a price-per-share of $30. Using the Price/Earnings (P/E) ratio of firm B as a benchmark, what should be the price-per-share of firm A?

+1
Answers (1)
  1. 22 October, 20:14
    0
    Company A's price per share is $45

    Explanation:

    The P/E ratio of one company can be used by investors and analysts to determine the value of another companie's stock in the industry. This is called apples-to-apples comparism.

    The P/E ratio is used to value a company by comparing its share price to earnings per share.

    P/E ratio = market value of shares / earnings per share

    For company B

    P/E ratio = 30/2 = $15

    Using company B's P/E ratio as a benchmark for company A

    15 = Price per share / 3

    Price per share = 15*3 = $45
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “Firm A has earnings-per-share of $3.00. Firm B has earnings-per-share of $2 and a price-per-share of $30. Using the Price/Earnings (P/E) ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers
You Might be Interested in
An organization in which the management builds a commitment to learning, works to generate ideas with impact, and works to generalize ideas with impact is creating a (n) question 9 options: focused organization. learning organization.
Answers (1)
Mr. E, a petroleum engineer, earns an $72,500 annual salary, while Mrs. E, a homemaker, has no earned income. Under current law, the couple pays 20 percent in state and federal income tax.
Answers (1)
Jobs that are grouped into the same pay grade should a. be paid at different wage rates because the worth of these jobs to the organization may differ. b.
Answers (1)
Last week, the Card Shop had 600 shoppers enter the store. Of those 600 shoppers, 120 actually made purchases. What would be the conversion rate for the store's sales staff?
Answers (1)
Which is true of overdraft protection (ODP) ? It ensures that your checks will not bounce. It is required by law for most accounts. It is usually available free for most accounts. It requires funds to be available from a linked account.
Answers (1)
New Questions in Business
In Section 7, the word warranty is best defined as A) a contract between USATestPrep and its Customers. B) a guarantee of any part of the site and its contents. C) a pledge of Customer service if anything goes wrong with the site.
Answers (2)
A (n) is the issuer's written promise to pay an amount equaling the par value. The par value is paid at a specified future date. Most often, the issuer is required to make semiannual interest payments.
Answers (1)
The primary goal of the Consumer Financial Protection Bureau is: A To monitor your credit report and ensure your identity and other sensitive data has not been compromised. B To protect against abusive or deceptive debt collection purposes.
Answers (1)
Jake Skinner purchases a big screen TV on credit and will repay the loan with one payment at the end of 90 days. What type of credit did Jake use?
Answers (1)
Which most likely results from producers engaging in specialization? Producers reduce their costs. Producers increase their market share. Producers decrease the materials needed for production. Producers always offer more competitive pricing.
Answers (1)
Home » Business » Firm A has earnings-per-share of $3.00. Firm B has earnings-per-share of $2 and a price-per-share of $30. Using the Price/Earnings (P/E) ratio of firm B as a benchmark, what should be the price-per-share of firm A?
Sign Up Forgot Password?