11 Equity Share ValuationP/E Ratio. (a) Calculate the market value of equity in the following companies using

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11 Equity Share Valuation—P/E Ratio.

(a) Calculate the market value of equity in the following companies using the price/earnings (P/E) multiple:

Company No. of ordinary shares in issue Earnings after interest and tax P/E multiple A plc 10m £3.56m 9.84 B plc 24m £5.64m 11.38 C plc 57m £10.72m 16.55 D plc 115m £3 1.97m 18.76

(b) State the limitations of the above approach to company valuation.

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