Price-earnings ratio method

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Price-earnings ratio method is this method involves dividing the market price of the firm's common stock by the annual earnings per share and multiplying this number by the firm's average net income for the past five years.

Definition

According to the Strategic Management by David and David (15th edition),

Price-earnings ratio method. This method involves dividing the market price of the firm's common stock by the annual earnings per share and multiplying this number by the firm's average net income for the past five years.
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