BPP Mcq#212 DDco
Sir i try to understand this by reviewing ans but i cant..
how he compare both companies
I shell be very thankful if you explain me in simple way..If possible..
Ask the Tutor ACCA FM
Business Valuation
8y ago#1The PE ratio is the market value divided by the earnings per share.
The earnings yield is the earnings per share as a % of the market value.
So the PE = 1/earnings yield, and vice versa.
So if the PE ratio is 12, then the earnings yield = 1/12 x 100% = 8.33%
If the earnings yield is 10%, then the PE ratio = 1/10 x 100 = 10
I do explain somewhere in one of the lectures what we mean by the PE ratio and earnings yield.
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