A company has a price-earnings ratio of 15 and a price-cash flow ratio of 10. If the earnings per share are $1.39, what is the cash flow per share?

Question

Quizplus · Accepted Answer

The price-earnings (P/E) ratio is 15, and the earnings per share (EPS) are $1.39. To find the price per share, we multiply the P/E ratio by the EPS: 15 * $1.39 = $20.85. Given the price-cash flow ratio is 10, we divide the price per share by this ratio to find the cash flow per share: $20.85 / 10 = $2.085, which rounds to $2.09.

A Company Has a Price-Earnings Ratio of 15 and a Price-Cash