EBK USING MIS
EBK USING MIS
10th Edition
ISBN: 9780134658919
Author: KROENKE
Publisher: YUZU
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Chapter 8, Problem 8.6CE8

Explanation of Solution

Reason for Tech Companies’ have high P/E ratio:

P/E ratio means price-to-earnings ratio which means relationship between company’s current share price and its earning per-share. Tech companies are software based companies and traditional companies are hardware based companies.

  • Normally, tech companies are viewed as having high growth in the society and at the same time, the usual assumption is that additional sales go directly to profit.
  • Tech companies revenues and earnings capacity cannot maintain the same growth as earlier and hopes have been moderated.
  • Tech companies usually develop their asset in-house and it does not get capitalized on the balance sheet.
  • It is very attractive in market because of their business presentation, model and expected upcoming earnings...

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