|Price / Earnings (P/E) Ratio|
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Definition of Price / Earnings (P/E) Ratio
Price / Earnings (P/E) Ratio
The ratio of price to earnings. Faster growing or less-risky firms typically have higher P/E ratios than either slower-growing or more risky firms.
The tendency of portfolios of stocks with a low price-earnings ratio to
ratio of stock price to earnings per share.
Shows the "multiple" of earnings at which a stock sells. Determined by dividing current
This key ratio equals the current market price
A measure of how much investors are willing to pay for each dollar
Capital rationing that under certain circumstances can be violated or even viewed
The use of various forms of gimmickry to distort a company's true financial performance in order to achieve a desired result.
A characterization used by the Securities and Exchange
Clause causing repayment of a debt, if specified events occur or are not met.
Belief that an effort to keep unemployment below its natural rate results in an accelerating inflation.
earnings of a firm as reported on its income statement.
A ratio computed by dividing annual
Also called the quick ratio, the ratio of current assets minus inventories, accruals, and prepaid
A ratio that shows how well a company could pay its current debts using only its most liquid or “quick” assets. It’s a more pessimistic—but also realistic—measure of safety than the current ratio, because it ignores sluggish, hard-toliquidate current assets like inventory and notes receivable. Here’s the formula:
See quick ratio
acid test ratio (also called the quick ratio)
The sum of cash, accounts receivable, and short-term marketable
Adjusted Cash Flow Provided by Continuing Operations
Cash flow provided by operating
Net income adjusted to exclude selected nonrecurring and noncash items of reserve, gain, expense, and loss.
The signal-to-noise ratio of an analyst's forecasts. The ratio of alpha to residual standard
Arm's length price
The price at which a willing buyer and a willing unrelated seller would freely agree to
Articles of incorporation
Legal document establishing a corporation and its structure and purpose.
A dealer's price to sell a security; also called the offer price.
Asset activity ratios
ratios that measure how effectively the firm is managing its assets.
The ratio of total assets to stockholder equity.
asset turnover ratio
A broad-gauge ratio computed by dividing annual
Gives the lessee the option to purchase the asset at a price below fair market
basic earnings per share (EPS)
This important ratio equals the net
Basic Earnings Power Ratio
Percentage of earnings relative to total assets; indication of how
price expressed in terms of yield to maturity or annual rate of return.
Benefit Ratio Method
The proportion of unemployment benefits paid to a company’s
Benefit Wage Ratio Method
The proportion of total taxable wages for laid off
This is the quoted bid, or the highest price an investor is willing to pay to buy a security. Practically
The price, specified at issuance, at which the issuer of a bond may retire part of the bond at a
The price for which a bond can be repaid before maturity under a call provision.
Canadian Deposit Insurance Corporation
Better known as CDIC, this is an organization which insures qualifying deposits and GICs at savings institutions, mainly banks and trust companys, which belong to the CDIC for amounts up to $60,000 and for terms of up to five years. Many types of deposits are not insured, such as mortgage-backed deposits, annuities of duration of more than five years, and mutual funds.
Placing one or more limits on the amount of new investment undertaken by a firm, either
a condition that exists when there is an
Limit set on the amount of funds available for investment.
Also called financial leverage ratios, these ratios compare debt to total capitalization
Cash flow coverage ratio
The number of times that financial obligations (for interest, principal payments,
Cash flow from operations
A firm's net cash inflow resulting directly from its regular operations
Cash Flow–to–Income Ratio (CFI)
Adjusted cash flow provided by continuing operations
CASH FLOWS FROM OPERATIONS
A section on the cash-flow Stockholders’ equity statement that shows how much cash came into a company and how much went out during the normal course of business.
The proportion of a firm's assets held as cash.
ratio of cash and cash equivalents to liabilities; in the case of a bank, the ratio of cash to total deposit liabilities.
Bond price excluding accrued interest.
Common stock ratios
ratios that are designed to measure the relative claims of stockholders to earnings
A single centralized account into which funds collected at regional locations
System whereby customers make payments to a regional collection center which transfers funds to
Movement of cash from different lockbox locations into a single concentration
A review of all engineering documentation used as the basis
Verifying that a delivered product matches authorizing
Consumer Price Index (CPI)
The CPI, as it is called, measures the prices of consumer goods and services and is a
Consumer Price Index (CPI)
An index calculated by tracking the cost of a typical bundle of consumer goods and services over time. It is commonly used to measure inflation.
contribution margin ratio
the proportion of each revenue dollar remaining after variable costs have been covered;
Controlled foreign corporation (CFC)
A foreign corporation whose voting stock is more than 50% owned
Conversion parity price
Related:Market conversion price
The number of shares of common stock that the security holder will receive from
The contractually specified price per share at which a convertible security can be
A measure of earnings that includes only the results of the primary operating
A legal "person" that is separate and distinct from its owners. A corporation is allowed to own
A legal entity, organized under state laws, whose investors purchase
Business owned by stockholders who are not personally
The net present value of an investment divided by the investment's initial cost. Also called
Cost Plus Estimated Earnings in Excess of Billings
Revenue recognized to date under the percentage-of-completion method in excess of amounts billed. Also known as unbilled accounts
ratios used to test the adequacy of cash flows generated through earnings for purposes of
Restriction of loans by lenders so that not all borrowers willing to pay the current interest rate are able to obtain loans.
Indicator of short-term debt paying ability. Determined by dividing current assets by current
A ratio that shows how many times a company could pay its current debts if it used its current assets to pay them. The formula:
Calculated to assess the short-term solvency, or debt-paying
A measure of the ability of a company to use its current assets to
Current assets divided by current liabilities. This ratio indicates the extent to which the claims of short-term creditors are covered by assets expected to be converted to cash in the near future.
Customary payout ratios
A range of payout ratios that is typical based on an analysis of comparable firms.
Days' sales in inventory ratio
The average number of days' worth of sales that is held in inventory.
Indicator of financial leverage. Compares assets provided by creditors to assets provided
A comparison of debt to equity in a company's capital structure.
Total debt divided by total assets.
The percentage of debt that is used in the total capitalization of a
Debt-service coverage ratio
earnings before interest and income taxes plus one-third rental charges, divided
A widely used financial statement ratio to assess the
The date on which a firm's directors meet and announce the date and amount of the next
The date on which the board of directors has declared a dividend.
The price fixed by the Clearing house at which deliveries on futures are in invoiced; also the
Devaluation A decrease in the spot price of the currency
diluted earnings per share (EPS)
This measure of earnings per share
Bond price including accrued interest, i.e., the price paid by the bond buyer.
A business segment that has been or is planned to be closed or sold off.
Net income and the gain or loss on disposal of a business segment whose assets and operations are clearly distinguishable from the other assets and operations of an entity.
Dividend payout ratio
Percentage of earnings paid out as dividends.
dividend payout ratio
Computed by dividing cash dividends for the year
dividend payout ratio
Percentage of earnings paid out as dividends.
dividend yield ratio
Cash dividends paid by a business over the most
The product of modified duration and the initial price.
Dollar price of a bond
Percentage of face value at which a bond is quoted.
Domestic International Sales Corporation (DISC)
A U.S. corporation that receives a tax incentive for
A common gauge of the price sensitivity of an asset or portfolio to a change in interest rates.
The weighted average of the time until maturity of each of the
The expected life of a fixed-income security considering its coupon
The time it takes for a policy or annuity to reach maturity.
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