Principle of Accounting PE and PEG Ratios Question

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vatthv

Business Finance

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There is a question (1-2 page, double space)

  • There are various limitations to employing the PE Ratio for company to company comparisons. Describe several of the limitations. A better measure would be to employ the PEG Ratio, how would you calculate?

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PE and PEG Ratios.

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PE and PEG Ratios.
PE ratio is a measurement of a company's valuation based on the prices of its shares
relative to the amount it obtains from the sale of its shares. It is a good indicator of a
company's market value and serves to indicate whether a company is excessively valued or
minimally valued. The ratio is often used in the comparison of different companies. It is also
an expression of the amount of time a company would need to take to get sufficient capital to
pay for its share...


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