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.
Accounts receivable are sometimes not gathered. Why do companies extend trade credit while they could insist on cash for all sales? Extending trade credit approximately leads to more sales for all time. If the incremental cash flows, comprisin
Describe how utilizing a risk-adjusted discount rate develop capital budgeting decision making compared to utilizing a single discount rate for all projects? The risk-adjusted discount rate develop capital budgeting decision making compared to t
Customers arrive at a bank with 2 tellers. The manager took the following data for 11 customers during a busy time. The manager has asked you to:(a) Create an event log. (b) Calculat
Normal 0 false false
Availability Period: The time period throughout which an appropriation might be encumbered (that is, committed for expenditure), generally specified by the law making the appropriation. When no particular time is given in financial legislation, the pe
Legislature, California: Two-house bodies of elected representatives vested with the accountability and power to make laws affecting the state (that is, except as limited by the veto power of the Governor).
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
what are the advantages and disadvantages of working capital source of finance
1. Albert Jones went to his local department store to purchase a pair of Levi s. He thought that the style of Levi that he wanted would sell for about $30 a pair. When he got to the store, he saw a sign which said, Levi s, all styles, $18 a pair. Albert bought three pairs of Levi s. The behavior of
18,76,764
1933894 Asked
3,689
Active Tutors
1436589
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!