Dear Platinum
I have to calculate PER for the attached financial statement. I
have problem finding the market price
of the firm from the following
statement from Woolworths. I do appreciate if you help me where can I find market value
of the firm from financial statement.
Regards
Marziyeh
Hi Marziyeh
ReplyDeleteThe Price Earnings (PE) ratio is price over (future) earnings per share. You can tell if its an expensive stock or not based on comparison with the PE's of the peer group or industry.
Earnings Per Share is the hard part to calculate as you need to strip out the CFO cooking their books. This is typically found in accruals or depreciation methods that give the company an advantage. Another difficulty with EPS is that it should be forward looking, so you need to have an element of forecasting.
The easy part is the historical price. Its for Woolworths so search WOW under the ASX website or Yahoo finance to get the share price (market price) at a specific date (say 30 June 2012).
You can use this as the numerator for the ratio, and then find the denominator or the EPS to calculate the PE ratio.
Good luck
Florian