Net profit before tax of Acumen Ltd. is ₹17,50,000. The company has 1,00,000 equity shares of face value ₹10 each, fully paid-up. Current market price of the shares is ₹85 per share. Income-tax @ 30% applies to the compa

CS Professional · Financial, Treasury and Forex Management · PYQS · June 2016
Net profit before tax of Acumen Ltd. is ₹17,50,000. The company has 1,00,000 equity shares of face value ₹10 each, fully paid-up. Current market price of the shares is ₹85 per share. Income-tax @ 30% applies to the company. Compute the P/E ratio for the company.

Answer & Explanation:

₹ Net profit Before tax 17,50,000 Less: tax @ 30% 5,25,000 Profit after tax 12,25,000 Earnings per share (EPS) = ₹12,25,000 / 1,00,000 = ₹12.25 Market price per share (MPS) = ₹85 P/E Ratio = MPS / EPS = ₹85 / ₹12.25 = 6.94

Topics: Valuation

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