Earnings Yield

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This is the inverse of the PE ratio

PE ratio

Basically this is how much your earnings are as a % of your share price

Value of Company using Earnings Yield = Total Earnings x 1/Earnings yield

PAT 300,000; Earnings yield 12.5%

What is the value of this company?

Solution
300,000 x 1/0.125 = $2,400,000

NotesQuizPaper exam