Valuation ratios · Question 11 of 12
Muster AG earns net income of 180 million euros, there are 60 million shares, and the price is 45 euros. What is the P/E ratio?
1 answer is correct. Hard
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Answer
- A 15
Explanation
Earnings per share are 180 million / 60 million = 3 euros. The P/E ratio is 45 / 3 = 15. The reciprocal, 3 / 45 ≈ 6.7%, is called the earnings yield and can be compared with interest rates.