Price to earnings ratio - Revision history

imported>Doug Williamson: Update definition.

2023-04-22T19:42:00Z

Update definition.

← Older revision		Revision as of 19:42, 22 April 2023
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	(PER).		(PER).

	The ratio of the equity ~~value~~ of a company to its accounting earnings (profit after tax).		The ratio of the equity capitalisation of a company to its accounting earnings (profit after tax).

	The PER (or PE ratio) can be calculated either on a per-share basis or on the total equity ~~value~~ and total earnings, giving identical results.		The PER (or PE ratio) can be calculated either on a per-share basis or on the total equity capitalisation and total earnings, giving identical results.


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	On total values:		On total values:

	PE ratio = Total equity ~~value~~ ÷ Total earnings.		PE ratio = Total equity capitalisation ÷ Total earnings.


	<span style="color:#4B0082">'''Example 1'''</span>		<span style="color:#4B0082">'''Example 1'''</span>

	Company A's total equity ~~value~~ is $630m and its relevant earnings are $63m,		Company A's total equity capitalisation is $630m and its relevant earnings are $63m,

	the PE ratio = $630m / $63m		the PE ratio = $630m / $63m
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	In another case, say comparable PE ratios for an unlisted Company B are 12, and Company B's relevant earnings are $10m.		In another case, say comparable PE ratios for an unlisted Company B are 12, and Company B's relevant earnings are $10m.

	The total value of Company B's equity can be estimated on this basis as:		The approximate total value of Company B's equity can be estimated on this basis as:

	12 x $10m		12 x $10m

2021-05-29T09:32:02Z

Add link.

← Older revision		Revision as of 09:32, 29 May 2021
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	* [[Capitalisation]]		* [[Capitalisation]]
	* [[Cyclically Adjusted Price to Earnings ratio]]		* [[Cyclically Adjusted Price to Earnings ratio]]
			* [[Dividend yield]]
	* [[Earnings]]		* [[Earnings]]
	* [[Earnings multiples]]		* [[Earnings multiples]]

2021-02-25T22:38:03Z

Add link.

← Older revision		Revision as of 22:38, 25 February 2021
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	* [[Bootstrap effect]]		* [[Bootstrap effect]]
	* [[Capitalisation]]		* [[Capitalisation]]
			* [[Cyclically Adjusted Price to Earnings ratio]]
	* [[Earnings]]		* [[Earnings]]
	* [[Earnings multiples]]		* [[Earnings multiples]]

2020-12-30T23:33:01Z

Add link.

2020-12-30T23:32:07Z

Links ordering.

← Older revision		Revision as of 23:32, 30 December 2020
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	* [[Earnings per share]]		* [[Earnings per share]]
	* [[Earnings yield]]		* [[Earnings yield]]
			* [[EBITDA multiple]]
	* [[Historic]]		* [[Historic]]
	* [[Multiples valuation]]		* [[Multiples valuation]]
			* [[PEG ratio]]
	* [[Prospective]]		* [[Prospective]]
	* [[Ratio analysis]]		* [[Ratio analysis]]
	* [[EBITDA multiple]]
	* [[PEG ratio]]

	[[Category:The_business_context]]		[[Category:The_business_context]]

2020-10-16T23:00:47Z

Classify page.

← Older revision		Revision as of 23:00, 16 October 2020
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	* [[EBITDA multiple]]		* [[EBITDA multiple]]
	* [[PEG ratio]]		* [[PEG ratio]]

			[[Category:The_business_context]]
			[[Category:Corporate_finance]]
			[[Category:Investment]]
			[[Category:Financial_products_and_markets]]

2015-11-14T07:57:17Z

Mend page link.

2015-11-14T07:56:27Z

Link with PEG page.

2015-11-13T15:46:41Z

Colour change of example headers

← Older revision		Revision as of 15:46, 13 November 2015
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	'''Example 1'''		<span style="color:#4B0082">'''Example 1'''</span>

	Company A's total equity value is $630m and its relevant earnings are $63m,		Company A's total equity value is $630m and its relevant earnings are $63m,
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	'''Example 2'''		<span style="color:#4B0082">'''Example 2'''</span>

	In another case, say comparable PE ratios for an unlisted Company B are 12, and Company B's relevant earnings are $10m.		In another case, say comparable PE ratios for an unlisted Company B are 12, and Company B's relevant earnings are $10m.

2015-11-11T16:33:17Z

Add Example numbering.

← Older revision		Revision as of 16:33, 11 November 2015
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	~~For example if~~ Company A's total equity value is $630m and its relevant earnings are $63m,		'''Example 1'''

			Company A's total equity value is $630m and its relevant earnings are $63m,

	the PE ratio = $630m / $63m		the PE ratio = $630m / $63m
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	PE ratios can also be used as a very simple estimation or comparison model, for corporate valuation.		PE ratios can also be used as a very simple estimation or comparison model, for corporate valuation.


			'''Example 2'''

	In another case, say comparable PE ratios for an unlisted Company B are 12, and Company B's relevant earnings are $10m.		In another case, say comparable PE ratios for an unlisted Company B are 12, and Company B's relevant earnings are $10m.