Читать книгу The Essential P/E - Keith Anderson - Страница 7

This Part starts with the story of how investors came to use the P/E. It has been in use for less than a century, but during that time it has become the most important investment ratio as far as practical investors are concerned.

A chapter looks at the more complicated component of the P/E: earnings. How the market decides share prices minute-by-minute is extremely complicated, but viewed from the level of the P/E calculation, the price used is quite straightforward. Earnings, however, are much more complex. There are many possible definitions of which parts of the profit and loss account are really ‘last year’s earnings’, and I cover them in detail here.

Having defined earnings, the share price and then the price–earnings ratio itself are covered in the following chapter. As with earnings, there are several different ways of calculating the P/E.

All the theory is brought to life in this Part’s final chapter, with a detailed example of how the P/E works in practice using Haynes Publishing’s annual report.