SIDC Module 7 Financial statement analysis and ratios question: Pi's price-earnings ratio

SIDC Module 7Financial statement analysis and ratios

Pi Bhd's shares trade at RM3.60. Its profit before tax per share is 32 sen, earnings per share is 24 sen and dividend per share is 9 sen. What is Pi's price-earnings ratio?

A 6.67 times
B 11.25 times
C 15.00 times
D 40.00 times

Show the answer and explanation

Answer: C. 15.00 times

P/E = share price ÷ earnings per share = 360 sen ÷ 24 sen = 15.00 times: investors pay RM15 for each RM1 of annual earnings. Using profit before tax per share gives 360 ÷ 32 = 11.25 times, but EPS is measured after tax. 40.00 times divides the price by the dividend, which is the reciprocal of the dividend yield. 6.67 times is EPS ÷ price × 100, the earnings yield (6.67%) written as a multiple. Source: SIDC M7 Study Outline Topic 3.2 Techniques of Analysis (investor ratios: P/E = price ÷ EPS) (as at October 2026).

Common mistake

Using a per-share figure other than after-tax EPS, or inverting the ratio into earnings yield.

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