RT Journal Article
SR Electronic
T1 The Price-Earnings Ratio
JF The Journal of Portfolio Management
FD Institutional Investor Journals
SP 57
OP 60
DO 10.3905/jpm.2002.319854
VO 28
IS 4
A1 Harold Bierman, Jr
YR 2002
UL https://pm-research.com/content/28/4/57.abstract
AB The P/E ratio is a widely used tool for valuation of common stock. One of its prime virtues is the simplicity of calculation. In this article the author suggests that in some situations a more complex calculation, but analogous to a P/E ratio, gives more useful information. The two situations reviewed are for a firm with an abnormal liability and for a firm with an abnormal amount of cash available for distribution. In these situations, adjustments to the P/E calculations of the type illustrated are desirable.