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
Describe difference between business risk and financial risk?Business risk refers to the uncertainty company hold regarding to its operating income (also termed as earnings before interest & taxes or EBIT). Business risk is brought onto sale
What is the schedule of Federal Funds and Reimbursements, Supplementary: The supplemental schedule proposed by departments throughout budget preparation that exhibits the federal receipts and reimbursements through source.
Price Increase: Budget adjustment to reflect the inflation factors for particular operating expenses constant with the budget instructions from the Department of Finance.
Consider the following data pertaining to a distribution center. Q : Define Performance Budget Performance Performance Budget: A budget in which proposed expenditures are prepared and tracked mainly by measurable performance objectives for actions or work programs. The performance budget might also incorporate other bases of expenditure categorization, lik
Performance Budget: A budget in which proposed expenditures are prepared and tracked mainly by measurable performance objectives for actions or work programs. The performance budget might also incorporate other bases of expenditure categorization, lik
Hypothetical production possibilities tables for New Zealand and Spain are given below Q : Why do financial managers compute the Why do financial managers compute the marginal tax rate?Financial managers utilize marginal tax rates to estimate the future after tax cash flows from investments. Because they are interested in how much of the next dollar earned through n
Why do financial managers compute the marginal tax rate?Financial managers utilize marginal tax rates to estimate the future after tax cash flows from investments. Because they are interested in how much of the next dollar earned through n
Budget: It is a plan of operation stated in terms of financial or other resource necessities for a particular period of time.
18,76,764
1951699 Asked
3,689
Active Tutors
1445799
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!