From the course: Excel for Investment Professionals

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Compute rolling P/E and P/B multiples for a stock

Compute rolling P/E and P/B multiples for a stock - Microsoft Excel Tutorial

From the course: Excel for Investment Professionals

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Compute rolling P/E and P/B multiples for a stock

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- [Instructor] Investors often select stocks based on various valuation multiples, or metrics, like PE ratios, but you want to compute a set of historical ratios for your firm over time to give you a better sense for whether a particular stock is cheap or not. The problem is that these ratios or multiples will change over time as the company changes. Let me show you what I mean. I'm in the 02_04_Begin Excel file. Now what I've got here is data for Microsoft, and we have this data running from April 1st, 2014, through September 28th, 2018. We've got the closing price for this data. In addition, I've gone through, and gather data on Microsoft's number of shares outstanding, net income, which is essentially their profit, their total sales or revenue, and the book value of the stock, or the book value of the company for every single date here. So on March 31st, 2014, for the first quarter of 2014, Microsoft had in our parlance 8,260 shares. Now in reality, these numbers will be in…

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