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.
Normal 0 false false
Explain LBO? Describe risks for the equity investors and also describe potential rewards? A leveraged buyout is purchase of publicly owned corporation through a small group of investors by using a large amount of borrowed money. The risks for
Final Budget: Usually refers to the Governor’s Budget as amended by actions taken on the Budget Bill (example, legislative changes, and Governor’s vetoes). Note
Legislative Counsel Digest: The summary of what a legislative measure does contrasting the existing law and the proposed change. This summary emerges on the first page of the bill.
Describe Treasury bill? How risky is it?Treasury bills are short term debt instruments issued through the U.S. Treasury which are sold at a discount and pay face value at maturity. They are very close to risk-free as they are backed throug
How is finance associated to the fields of economics and accounting?
Explain intermediation.The financial system makes it achievable for surplus and deficit economic units to come together, exchanging funds for securities, to their mutual profit. While funds flow from surplus economic units to a financial institu
Merit Salary Adjustment (MSA): The cost factor resultant from the periodic raise in salaries paid to the personnel occupying authorized positions. The personnel usually receive a salary raise of 5 percent per year up to the upper sala
18,76,764
1945322 Asked
3,689
Active Tutors
1438246
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!