In this video, learn how to estimate the value of a company using the price-earnings, P/E, ratio.
- Market prices incorporate all kinds of information. … For example, the market prices for firms in a given industry … include average investor expectations … about future earnings growth in that industry … and required rates of return for firms in that industry. … This information is summarized … in the price-earnings or P/E ratio, … and it's defined as price divided by earnings, … hence a clever name, price-earnings ratio. … In this context, … price is the market capitalization of the company, … the amount it would cost you … to buy all the ownership shares. … Earnings is just another way to say net income. … This P/E ratio is an example of a price multiple, … exactly analogous to the price per square foot multiple … commonly used in estimating the value … of residential and commercial real estate. … In general industries in which … expected future earnings growth is expected to be high, … are characterized by high P/E ratios, … like houses in Beverly Hills … with high prices per square foot. …
- Accounting basics
- Reviewing the balance sheet and income statement
- Credits, debits, and journal entries
- Making financial statements
- Issues in financial accounting
- Revenue recognition
- Deferring taxes
- Analyzing financial statements
Skill Level Beginner
Accounting Foundations: Internal Controlswith Jim Stice1h 29m Intermediate
Cost Accounting: Analyzing Product Profitabilitywith Rudolph Rosenberg56m 49s Intermediate
Why financial accounting?1m 13s
1. Accounting Basics
The accounting equation3m 37s
2. The Financial Statement
3. The Mechanics of Accounting
4. Current Issues in Financial Accounting
5. Financial Statement Analysis
- Mark as unwatched
- Mark all as unwatched
Are you sure you want to mark all the videos in this course as unwatched?
This will not affect your course history, your reports, or your certificates of completion for this course.Cancel
Take notes with your new membership!
Type in the entry box, then click Enter to save your note.
1:30Press on any video thumbnail to jump immediately to the timecode shown.
Notes are saved with you account but can also be exported as plain text, MS Word, PDF, Google Doc, or Evernote.