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Dear sir,
when do we take a weighted average of P/E ratios? I have some confusion regarding this.Do we consider this if absolutely no info regarding whether the acquiring co retains its P/E ratio or not?
Thanks
There is non rule – it depends on the situation and the wording of the question.
Usually we would use the PE ratio of the acquiring company, on the basis that they will be able to achieve the same growth as they currently have. But again, this is not a rule and it depends on what information there is in the question.
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