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.
How are financial trades made on a planned exchange?Each of exchange listed security is traded at a particulate location on the trading floor called the post. The trading is supervised through specialists who act either as brokers (bringing toge
COBCP: Capital outlay budgets are zero-based each and every year, thus, the department should submit a written capital outlay budget modify proposal for each fresh project or following phase of an existing project for which the department needs fundin
Describe sunk cost? Is it relevant while evaluating a proposed capital budgeting project? Describe. A sunk cost is a cash flow which has already occurred, or that will take place, whether a project is accepted or discarded. It is irrelevant wh
Category: A grouping of related kinds of expenditures, like Personal Services, Reimbursements, Operating Expenses and Equipment, Special Items of Expense, Un-classified, Local Costs, Capital Costs, and inner Cost Recovery.
Compare and contrast a prescribed benefit and contribution pension plan.In a prescribed benefit plan, retirement benefits are determined by a formula that typically considers the worker's age, salary, and years of service. The employee and
What do you mean by Authorized: Provided the force of law (example, by statute). For certain action or quantity to be authorized, it should be possible to recognize the enabling source and date of approval.
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
Normal 0 false false
Explain negative consequences of a company holding too much cash? A company holding too much cash would be giving up the chance to invest more in income generating assets
Discuss risk through the perspective of the Capital Asset Pricing Model (CAPM).The Capital Asset Pricing Model, or CAPM, can be utilized to compute the appropriate required rate of return for an investment project specified its degree of risk as
18,76,764
1961708 Asked
3,689
Active Tutors
1443918
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!