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Dear sir,
As per my understanding:“Normal” p/e ratio is the ratio of a company’s price by its earnings. In other words, how much are investors willing to pay for its earnings. The higher the earning potential, the higher investors will pay
Implied p/e ratio is the ratio of the value an acquiring company would place on the target company and that “implied value” per share is then divided by the target company’s earnings per share. Therefore, implied p/e ratio is not an actual p/e ratio, rather it is the p/e ratio of the target company based on what the acquiring company thinks the price/worth of target company is.
Am I correct?
Also sir, is there enough time to pass the exams from today by doing lots and lots of question practice?What you have written is correct (although I prefer that rather than call it the ‘implied’ ratio I would call it the expected PE ratio).
You have not said when you intend taking the exam. Assuming you are looking to take it in March then there should certainly be enough time if you keep practicing 🙂
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