Price Earning ratio
Define the term Price Earning ratio and how it is calculated?
Expert
Price Earning ratio:
Price earnings ratio commonly known as P/E ratio helps in the assessment of the company’s current share price in relation to its earnings.
It is calculated as:-
We can say MPS÷EPS of the stock of the company.The P/E ratio can be calculated for the past year as well as for the future years. In both the situations the market price remains as the current stock price of the company. Earnings shall vary w.r.t the year – actual earnings or the projected earnings as the case may be. Example: if the company is trading at 60$ and the earnings of the last 12 months were 2$ then per share then the P/E ratio is 30.Interpretation:• The ratio reflects the price being paid by the market for each rupee of reported EPS. The ratio shall measure the expectations of the market and the investors. It shall depict the performance of the firm in the industry.• Shares which have high growth rate shall have high P/E ratio since investors are ready to pay more for them. But if the risk factor in the share increases the market price of the share gets affected adversely and so is the P/E ratio of the firm.• From the investment point of view of the investor the ratio shall help in deciding whether:--To purchase the shares of the firm or-To refrain from purchasing the shares.
Do mergers result in layoffs?Entire employment in the banking industry in fact has increased slightly over the last ten years. Some mergers do result in layoffs. Though, several banks demolish their staff largely through attrition to ease the tr
Initiative: The power of electors to propose statutes or Constitutional amendments and to accept or reject them. An initiative should be limited to a single subject and be filed with the Secretary of State with the suitable number of voter signatures
How has the merger activity in the past decade influenced the concentration of assets in the banking industry? Over the last decade, the number of commercial banks declined through twenty-one percent and the averag
Limited-Term Position (LT): Any place that has been authorized only for a particular length of time with a set termination date.Limited-term positions might be authorized throughout the budget procedure or in transactions approved by the D
Character of Expenditure: A classification recognizing the major purpose of expenditure, like State Operations, Local Assistance, Capital Outlay, or Unclassified.
Describe capital rationing? Should a firm practice capital rationing? Why? Capital rationing is the practice of setting dollar restriction on what will be invested in new capital budgeting projects. Proprietorships, partnerships and private c
Which kind of insurance company usually takes on the greater risks: a life insurance company or a property and casualty insurance company? The risks sheltered against by property and casualty companies are much less predictable than are the risk
Normal 0 false false
Current Year (CY): It is a term utilized in budgeting and accounting to designate the operations of the current fiscal year in contrast to past or future periods.
Describe the risk-return relationship.The relationship among risk and required rate of return is term as the risk–return relationship. This is a positive relationship since the more risk assumed, the higher the required rate of retur
18,76,764
1945451 Asked
3,689
Active Tutors
1445209
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!