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Holding Period Return Holding Period Yield Annual HPR Mean Rate of Return End Value/ Beginning Value HPR-1 (HPR)^1/n Average of an Investments Returns over time Can be equal to Zero, Greater than 1, Less than 1 where n is the number of years investment is held Asian Paints Limited EPS P/E or Earning Multiplier Dividend & Yield Market Capitalisation PAT/No. of outstanding shares Book Value/Market Value Sector P/E Free Float Factor Market Capitalisation using ff EV/EBITDA ratio Book Value Less Less Less Shareholders funds Number of Shares Issued Book Value Share Price /EPS Dividend per share/ Market price per share is a measure of realised return Issued Shares * Market Price Per Share Book Value is value on Balance Sheet. It is used as the net asset value of a company's shares incase of liquidation. For a going concern the market price should normally never fall below this value. Total sector Capitalisation/Total net profits Estimate of proportion of shares that are freely traded in the market. Issued Shares * Free Float * Market Price per share Mkt Capitalization+Book value of debt/EBITDA Total Assets of a Company Current Liabilities Long Term Liabilities Preference Shares Issued and Subscribed Capital is 95,919,779 shares of FV of Rs.10 Shareholders funds/ Number of shares issued Question: Gitanjali wants to invest INR 100000 in the IT sector. From the below data, suggest the better investment option to Gitanjali, bas ABC stock is trading at INR 2285, and the trailing EPS is INR 48.5 47.11 PQR is trading at INR 126, and the trailing EPS is INR 2.1 60 XYZ stock's current price is 1900, and the trailing EPS is INR 41.7 45.56 Gitanjali should invest in? tment option to Gitanjali, basis the P/E ratio. Impact of Tax on Profitability Loan Funds Deferred Tax Liability Total Loan Funds Interest from PnL Interest Rate or cost of debt A B A+B Interest/Total Loan Funds Impact of Tax on Profitability Company A Equity Debt Total Capital PBT Tax PAT Return on Equity (pre tax) ROE(post tax) Incase of Asian Paints ROE Pre Tax Tax ROE Post Tax Actual ROE Post Tax PBT PBT less current year tax Shareholders Funds Impact of leverage ROE-ROTA= (ROTA-Interest Rate)*(Debt/Networth) Company B 300 200 500 100 35 65 33.33% 21.66% 300 200 500 100 10 90 33.33% 30.00% 54.78% 30% 38.35% 56.82% 30% 39.77%