From the following information calculate Price Earning ratio:
70,000 Equity Shares of ₹10 each
Net profit after tax before dividend - ₹1,75,000
Market price of share ₹13
Dividend declared @ 15%
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → 5.2
Earnings per share = ₹1,75,000 ÷ 70,000 shares = ₹2.50
Price earning ratio = market price per share ÷ earnings per share
P/E ratio = ₹13 ÷ ₹2.50 = 5.2
The dividend rate is not needed for this ratio; it is used for the dividend payout ratio.
NCERT (2026-27 edition):
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