Practice Price Earning Ratio (p/e Ratio) (1.4.4.8) - Ratio Analysis - ICSE 12 Accounts

Practice: Price Earning Ratio (P/E Ratio)

Lesson 1.4.4.8Ratio Analysis

Practise this section

9 questions

Flashcard drill
3 cards from this section. Quick, good the night before a test.
Exercise
6 questions · about 4 min · pass mark 70%. Hints available.
Sign up to start the exercise
Quiz
3 questions · about 2 min · pass mark 70%. Hints available.
Sign up to start the quiz

6 sample questions

Question 1.
What is the formula for calculating the P/E Ratio?
Show hintHide hint
Think about how we relate market price to earnings.
Question 2.
If a company's market price per share is ₹150 and its EPS is ₹10, what is the P/E Ratio?
Show hintHide hint
Use the formula: Price divided by earnings.
3Question 3.
What does a high P/E Ratio generally indicate?
- Low growth expectation
- High growth expectation
- No impact on value
Show hintHide hint
Think about the relationship between stock price and earnings expectations.
4Question 4.
True or False: A negative P/E Ratio indicates the company is making a profit.
- True
- False
Show hintHide hint
Consider what happens to P/E when earnings are negative.
Question 5.
A company has a current market price of ₹900 per share and EPS of ₹75. Another competitor has a market price of ₹600 with an EPS of ₹30. What can you infer from the P/E Ratios of both companies?
Show hintHide hint
Calculate both ratios and compare.
Question 6.
Critique the reliance on P/E Ratios in the decision-making process for investments in fluctuating markets.
Show hintHide hint
Reflect on these factors' influence when evaluating stock value.

5 more questions in this section. Enroll free to practise them all.