ESSENTIAL OF CORP FINANCE W/CONNECT
ESSENTIAL OF CORP FINANCE W/CONNECT
8th Edition
ISBN: 9781259903175
Author: Ross
Publisher: MCG CUSTOM
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Chapter 7, Problem 14CTCR
Summary Introduction

To discuss: The difficulties on using the Price to Earnings (PE) Ratio for the valuation of stock.

Introduction:

Price to Earnings (PE) Ratio is a ratio that indicates the amount of investors who are really willing to pay for every dollar of stock per earnings. This ratio is used for stock selection purposes. The mathematical equation to determine the PE Ratio is as follows:

Price earnings ratio=Price per shareEarnings per share

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ESSENTIAL OF CORP FINANCE W/CONNECT

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