Exercise 11-14 Price-earnings ratio computation and interpretation LO A2 Earnings Market Value per Share $10.00 per Share $ 160.00 Company 2 8.00 79.20 3 6.00 80.40 4 35.00 227.50 Compute the price-earnings ratio for each of these four separate companies. Price-Earnings Ratio Company Choose Numerator: Divided by Choose Denominator: Price-Earnings Ratio / Price-earnings ratio %3D %3D %3D 3 %3D 4 %3D II Which stock might an analyst likely investigate as being potentially undervalued by the market? OCompany 1 Company 2 Company 3 Company 4

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