ACCA AFM Syllabus B. Advanced Investment Appraisal - Earnings Yield - Notes 5 / 11
This is the inverse of the PE ratio
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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
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Syllabus B. Advanced Investment Appraisal
B4. Valuation and the use of free cash flows
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Syllabus B. Advanced Investment Appraisal
B4. Valuation and the use of free cash flows