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Damodaran on Earning Mult

Damodaran on Earning Mult

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Published by giovanniromeo904392

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Categories:Business/Law
Published by: giovanniromeo904392 on Mar 17, 2009
Copyright:Attribution Non-commercial

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10/17/2011

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Aswath Damodaran1
Earnings Multiples
Aswath Damodaran
 
Aswath Damodaran
Price Earnings Ratio: Definition
PE = Market Price per Share / Earnings per Share
n
There are a number of variants on the basic PE ratio in use. They arebased upon how the price and the earnings are defined.
n
Price:is usually the current priceis sometimes the average price for the year
n
EPS:earnings per share in most recent financial yearearnings per share in trailing 12 months (Trailing PE)forecasted earnings per share next year (Forward PE)forecasted earnings per share in future year
 
Aswath Damodaran
PE Ratio: Descriptive Statistics
Distribution of PE Ratios - September 2001
0200400600800100012000-4 4 - 6 6 - 8 8 - 10 10 - 1515-2020-2525-3030-3535-4040 - 4545- 5050 -7575 -100> 100
PE ratio
   N  u  m   b  e  r  o   f   f   i  r  m  s
Current PETrailing PEForward PE

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