Write EPS and PE ratio with examples?

1.	Write EPS and PE ratio with examples?
Answer» Earnings per Share (EPS): EPS measures the profit available to the equity shareholders on a per share basis, that is, the amount that they can get on every share held. It is calculated by dividing the profit available to the shareholders by number of outstanding shares. The profit available to the ordinary shareholders is net profit after taxes and preference dividend. EPS = Net profit after tax/number of ordinary shares outstanding Price to Earnings Ratio: The P/E ratio reflects the price currently being paid by the market for each rupee of currently reported EPS. It measures investors’ expectations and market appraisal of the performance of a firm. It is defined as: Price to Earnings Ratio = Market Price of share/EPS

Answer»

Earnings per Share (EPS): EPS measures the profit available to the equity shareholders on a per share basis, that is, the amount that they can get on every share held. It is calculated by dividing the profit available to the shareholders by number of outstanding shares. The profit available to the ordinary shareholders is net profit after taxes and preference dividend.

EPS = Net profit after tax/number of ordinary shares outstanding

Price to Earnings Ratio: The P/E ratio reflects the price currently being paid by the market for each rupee of currently reported EPS. It measures investors’ expectations and market appraisal of the performance of a firm. It is defined as:

Price to Earnings Ratio = Market Price of share/EPS

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