Channel: Mahendra kori

Category: Education

Tags: pe ratio kitna hona chahiyepe ratiope ratio explainedprice to earnings ratiope ratio in stock marketpe ratio pb ratio kya hota haiprice to earnings ratio explained in hindiwhat is price to earning ratiope ratio kya hota haip/e ratiope ratio in stock market hindipe ratio kaise check kareprice-to-earnings ratiomahendra kori

Description: The price-to-earnings ratio (P/E ratio) is the ratio for valuing a company that measures its current share price relative to its earnings per share (EPS). The price-to-earnings ratio is also sometimes known as the price multiple or the earnings multiple. P/E ratios are used by investors and analysts to determine the relative value of a company's shares in an apples-to-apples comparison. It can also be used to compare a company against its own historical record or to compare aggregate markets against one another or over time. Like any other fundamental designed to inform investors as to whether or not a stock is worth buying, the price-to-earnings ratio comes with a few important limitations that are important to take into account because investors may often be led to believe that there is one single metric that will provide complete insight into an investment decision, which is virtually never the case. Companies that aren't profitable and, consequently, have no earnings—or negative earnings per share—pose a challenge when it comes to calculating their P/E. Opinions vary as to how to deal with this. Some say there is a negative P/E, others assign a P/E of 0, while most just say the P/E doesn't exist (N/A or not available) or is not interpretable until a company becomes profitable for purposes of comparison. One primary limitation of using P/E ratios emerges when comparing the P/E ratios of different companies. Valuations and growth rates of companies may often vary wildly between sectors due to both the different ways companies earn money and the differing timelines during which companies earn that money. As such, one should only use P/E as a comparative tool when considering companies in the same sector because this kind of comparison is the only kind that will yield productive insight. Comparing the P/E ratios of a telecommunications company and an energy company, for example, may lead one to believe that one is clearly the superior investment, but this is not a reliable assumption. Copyright Disclaimer: - Some contents are used for educational purposes under fair use. Copyright Disclaimer under Section 107 of the Copyright Act 1976, allowance is made for "fair use" for purposes such as criticism, comment, news reporting, teaching, scholarship, and research. Fair use is a use permitted by copyright statutes that might otherwise be infringing. Non-profit, educational, or personal use tips the balance in favour of fair use.