PE Ratio and Share Price
PE Ratio can be used to determine the share price of unquoted
company. The quoted company share price is available in stock exchange and therefore
P/E ratio is not relevant for calculating quoted company share price. Share
price is calculated by simply multiplying the P/E Ration with Earning per Share
(EPS).
Share Price = P/E Ratio x EPS
Example of Share price
with PE Ratio
|
EPS
|
$ 2
|
|
P/E Ratio
|
62
|
|
Calculate the
Share Price
|
?
|
|
|
|
Solution
|
EPS
|
$ 2
|
|
P/E Ratio
|
62
|
|
Share Price = ( $
2 x 62)
|
$ 124
|
|
|
|
