Pe & Peg Ratio

Absent information about investors’ earnings quality concerns, it is likely to be the case that most of the variation in P/E ratios is due to differences in growth opportunities and (to a lesser extent) risk.

Price earnings ratio is a valuation ratio of a company's current share price compared to its per-share earnings. Coca-Cola has a lower P/E ratio than Pepsi Co. The industry average for P/E ratio is 21.1. This means neither of the companies beat the industry average ratio. Between the

|P/E |value/EBIT is useful for valuing capital-intensive |will be overstated which lead this method inaccurate.|

Companies with the most consistent earnings history or strongest growth prospects receive the highest P/E multiples. We calculate price targets for the current and next fiscal year by applying the stock 's current multiple to the average professional analyst 's estimate. Valuation using RadioShack 's current multiple (P/E): Fiscal Year

Rate of return on common stockholders’ equity: This ratio determines how much profit the company makes from the money invested by the shareholders. Investors will use this ratio to determine if the company is profitable over

Earnings Per Share: measures net income per common share by dividing net income by number of shares outstanding.

By using profitability ratios, investors can measure the income or operating success of a company for a given period of time.

EPS is calculated as a ratio of earnings (Net Income – Preferred Dividends) to the average number of outstanding

The return on equity ratio measures the rate of return that the company earns on the

A graph below represents Earning per Share ratio. EPS ratio is used when the company wants to know how are they doing in their businesses from year to year. EPS is shown in pence. (Dyson, 2010) A year 2009 was not so profitable for company as EPS was -2,79p. This means that business was making little money, which was not good for shareholders. However, in 2010 the EPS was quite high, 14,76p, what means the company is making profit and shareholders want to invest in business.

Financial ratios can be used for a quick comparison to other companies in the industry and to the same company over time. They allow you to ignore the numbers and focus on their relationships.

Market value ratios are probably the most important ratios for any publicly traded company; it’s an indicator of how well the company is perceived as a whole. It reflexes how investors view the future performance and risks of the company. One such market value ratio that is used commonly is the cash flow per share ratio. This ratio is measured by taking the operating cash flow – preferred dividends divided by the common shares outstanding. This ratio is more reliable than the EPS or earnings per share ratio because it is less likely to be manipulated. Because of this the cash flow per share ratio is judged to be a better indicator of a company’s strength and position within the market. For 2013 Disney had the highest cash flow per share ratio amongst its competitors which was valued at 5.29. This was slightly better than Time Warner’s which was 4.04 and was significantly better than Fox’s 1.28.

In general, the higher the ROI and rate of earnings growth, the higher the P/E. . In the past, for a very long period of time P/E ratios in the range of 12 to 18 were consider good P/E ratios for a company. In recent years, the 12 to 18 values have been abandoned as a norm and what can be considered the norm now is under debate.

The calculation of ratios is the calculation technique for analyzing a company’s financial performance that divides or standardize one accounting measure by another economically relevant measure. Financial ratios can be used as a tool to demonstrate financial statement users for making valid comparisons of firm operating performance, over time for the same firm and between comparable companies. External investors are mostly interested in gaining insights about a firm’s profitability, asset management, liquidity, and solvency.

The PE ratio is obtained by dividing current market price of share by its earnings per share.