CFA Practice Question

There are 191 practice questions for this study session.

CFA Practice Question

Justin is trying to estimate the trailing P/E multiple of IBM. The current stock price is $86.20. Justin gathers the following data from the company's financial statements:

IBM's current fiscal year ends in December 2002. The expected EPS for the 4th quarter of 2002 and the next fiscal year are $0.48 and $3.66, respectively. The trailing P/E of IBM is ______.
A. 23.55
B. 33.67
C. 30.1
Explanation: To calculate the trailing P/E multiple Justin needs EPS data for the previous 4 quarters. The trailing P/E multiple is calculated by dividing the current market price per share by the trailing EPS: P/E = Market Price / Trailing EPS = $86.2 / $2.86 = 30.1.

User Contributed Comments 3

User Comment
thekobe trail= observed
Inaganti6 hahaha i just love this program and the mind games. The same exact question was used in the review set before but it asked for FORWARD P/E. Gotta be oh-so-careful when reading the question. Presumptions are the mother of all mistakes, and more so true when reading questions for this exam !
sampo1 cheers thekobe
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