Question

L&R’s stock is currently valued at $32.70 a share. The firm had earnings per share of $1.88 last year and projects earnings of $2.10 a share for next year. What is the forward price-earnings ratio?

Answer 1

$15.57

Step-by-step explanation:

Given that

Earned share = $1.88

Project earning = $2.10

The computation of the forward price-earnings ratio is shown below:-

Forward Price earning ratio = Price ÷ Forward Earning per share

= $32.70 ÷ $2.10

= $15.57

Therefore, to calculate the forward price-earnings ratio we simply divide the price with Forward Earning per share.