42 what price/earnings ratio.
Awards/winner (p) ratio is a measure which is of particular interest for investors in public companies. The ratio p gives you an idea of how earn the current price of the stock of sharing for every dollar you a salary. Prop the value profit market actions, not the book value of the shares of stock that is listed in the balance sheet.
P is a reality on how high the current market price is the underlying benefit which is winner of the company. Reports of unusually high p are justified only when investors think benefit of the company per share (EPS) has a lot of potential for increase in the future.
The ratio of p is the current price of the market shares divided by the most recent end 12 months diluted EPS is calculated. The stock prices bounce around day to day and are subject to major changes in the short term. The current p ratio should be compared with the average p just to measure or of the company sales above or below the average of the market.
P ratios are currently high, despite a slowdown in four years on the stock market. P ratios vary from industry to industry and from one year to another. A dollar of EPS can order a market value for only $10 for a mature company in a sector were, while a dollar that van EPS in a dynamic company in a growth industry a market value of $30 per dollar of revenue can have, or net income.
In short, the capitalization coefficient or the ratio of p the current price of a capital market divided by its back 12 months diluted earnings per share (EPS) or basic earnings per action if the company is not diluted EPS reports. A low p may underbalued stock or a pessimistic prognosis by investors. A high p can reveal an overvalued stock or could be based on an optimistic prognosis of investors.
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