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10 August, 18:11

Last year, Alfred's Automotive had a price-earnings ratio of 15 and earnings per share of $1.20. This year, the price earnings ratio is 18 and the earnings per share is $1.20. Based on this information, it can be stated with certainty that:

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  1. 10 August, 20:37
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    Investors' outlook for the firm has improved.

    Explanation:

    Computation of Market price.

    MPS = PE ratio * EPS

    ⇒ MPS (Previous) = $1.20 * 15

    ⇒ MPS (Previous) = $18

    ⇒ MPS (Current) = $1.20 * 18

    ⇒ MPS (Current) = $21.60

    So, we say that the market price has increased.

    Investors' outlook for the firm has improved.
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Home » Business » Last year, Alfred's Automotive had a price-earnings ratio of 15 and earnings per share of $1.20. This year, the price earnings ratio is 18 and the earnings per share is $1.20. Based on this information, it can be stated with certainty that:
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