Price to earnings ratio: Difference between revisions
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The PER can be calculated either on a per-share basis or on the total equity value and total earnings, giving identical results. | The PER can be calculated either on a per-share basis or on the total equity value and total earnings, giving identical results. | ||
Per share: | Per share: | ||
PER = Current share price ÷ Earnings per share. | PER = Current share price ÷ Earnings per share. | ||
On total values: | On total values: | ||
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In another case if comparable PERs for an unlisted Company B are 12, and its relevant earnings are $10m, the total value of Company B's equity can be estimated on this basis as 12 x $10m = $120m. | In another case if comparable PERs for an unlisted Company B are 12, and its relevant earnings are $10m, the total value of Company B's equity can be estimated on this basis as 12 x $10m = $120m. | ||
Sometimes written as ''P/E ratio'' or ''PE ratio''. | Sometimes written as ''P/E ratio'' or ''PE ratio''. | ||
Revision as of 20:22, 15 July 2014
(PER).
The ratio of the equity value of a company to its accounting earnings (profit after tax).
The PER can be calculated either on a per-share basis or on the total equity value and total earnings, giving identical results.
Per share:
PER = Current share price ÷ Earnings per share.
On total values:
PER = Total equity value ÷ Total earnings.
For example if Company A's total equity value is $630m and its relevant earnings are $63m, the PER = $630m/$63m = 10.
In another case if comparable PERs for an unlisted Company B are 12, and its relevant earnings are $10m, the total value of Company B's equity can be estimated on this basis as 12 x $10m = $120m.
Sometimes written as P/E ratio or PE ratio.
Also known as price earnings ratio.
