Question

The “E” in the PE ratio can be determined in several ways. Identify at least three different variations in measuring earnings for the PE ratio.

Answer 1

P/E ratio stands for Price Earning Ratio,

Where Price refers to Market Price Per Share

and

Earning refers to Earning Per Share

So,

Now Market Price per share can be Taken directly from Share Market ( in case of listed company)

But For Calculations of Earning per share

We can use some formulas

It can also be calculated in other ways depending on the data available in the question.

I hope it will help you in your studies.

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