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Price Earning ratios

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P/E ratios are a useful indicator and tool when performing valuation and comparing firms. List three factors that should be considered or adjusted for when comparing P/E ratios among different firms.

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P/E ratios are a useful indicator and tool when performing valuation and comparing firms. List three factors that should be considered or adjusted for when comparing P/E ratios among different firms.

Price Earning ratios = Market price of equity per share/Earnings per share. The relationship between the market price of a share of stock and the stock's current earnings per share is often stated in terms of a price-earnings ratio. The price-earnings ratio is widely used by investors as a general guideline in gauging stock values. If the ratio is unusually high or low for a firm in relation to its industry, an analyst is likely to suspect that the stock is overvalued or undervalued. This ratio ...

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