When first introducted to P E / R it had a different name and it factored in companies debt. Does anyone rember what it was called and briefly how it worked
2006-08-19 07:52:14 · 4 answers · asked by Mister2-15-2 7 in Business & Finance ➔ Investing
More interested in old termonology and what it provided, than direct application.TH for some good answers.
2006-08-19 09:22:19 · update #1
You got one accurate answer and one very inaccurate answer as well. The P/E ration is the stock price divided by the earnings per share. Directly, it has nothing to do with debt. The debt/equity ratio reflects how many dollars of debt a company carries for every dollar of equity. Equity is a tricky concept in and of itself since equity is a function of shares sold, retained earnings and such. It is better to look at a combination of factors when considering the purchase of a stock, rather than focusing in on one factor.
2006-08-19 09:29:56 · answer #1 · answered by Anonymous · 0⤊ 0⤋
You might be referring to the Debt / Equity Ratio. It's the relationship between the amount that a company owes, and the amount of the ownership interest owned by shareholders.
The price / earnings ratio really does not reflect any debt that a company owes.
2006-08-19 15:15:07 · answer #2 · answered by ? 6 · 0⤊ 0⤋
Well, P/E ratio captures the company's balance sheet debt. I am a finance major with years of experience and I do not know. What are you trying to do ?>
2006-08-19 14:59:21 · answer #3 · answered by davidcool756 2 · 0⤊ 0⤋
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2006-08-19 14:57:34 · answer #4 · answered by Anonymous · 0⤊ 0⤋