Practice Price Earning Ratio (P/E Ratio) - 1.4.4.8 | ICSE Class 12 Accounts – Chapter 5: Ratio Analysis | ICSE Class 12 Accounts
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Practice Questions

Test your understanding with targeted questions related to the topic.

Question 1

Easy

What is the formula for calculating the P/E Ratio?

💡 Hint: Think about how we relate market price to earnings.

Question 2

Easy

If a company's market price per share is ₹150 and its EPS is ₹10, what is the P/E Ratio?

💡 Hint: Use the formula: Price divided by earnings.

Practice 4 more questions and get performance evaluation

Interactive Quizzes

Engage in quick quizzes to reinforce what you've learned and check your comprehension.

Question 1

What does a high P/E Ratio generally indicate?

  • Low growth expectation
  • High growth expectation
  • No impact on value

💡 Hint: Think about the relationship between stock price and earnings expectations.

Question 2

True or False: A negative P/E Ratio indicates the company is making a profit.

  • True
  • False

💡 Hint: Consider what happens to P/E when earnings are negative.

Solve 1 more question and get performance evaluation

Challenge Problems

Push your limits with challenges.

Question 1

A company has a current market price of ₹900 per share and EPS of ₹75. Another competitor has a market price of ₹600 with an EPS of ₹30. What can you infer from the P/E Ratios of both companies?

💡 Hint: Calculate both ratios and compare.

Question 2

Critique the reliance on P/E Ratios in the decision-making process for investments in fluctuating markets.

💡 Hint: Reflect on these factors' influence when evaluating stock value.

Challenge and get performance evaluation