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8 July, 11:35

Reno Revolvers has an EPS of $1.50, a cash flow per share of $3.00, and a price/cash flow ratio of 8.0. What is its P/E ratio?

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  1. 8 July, 11:52
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    16

    Explanation:

    The formula to compute the price earning ratio is shown below:

    Price-earnings ratio = (Market price per share) : (Earning per share)

    where,

    Earning per share is $1.50

    And, the market price per share is

    = Cash flow per share * price/cash flow ratio

    = $3 * 8

    = $24

    Now placing this value to the formula above

    So, the price earning ratio is

    = $24 : $1.50

    = 16
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