Price-earnings Ratio


Price-earnings ratios are published daily in newspapers for stock market-listed companies, along with the gross dividend yield, dividend cover and other information about the shares of each company. The method of calculation is what the name suggests:

Price-earnings ratio = stockmarket share price divided byEarnings per share

The stockmarket share price used is the one published in the financial newspapers at the close of business in the stock exchange for the previous evening.

As a generalization, when the price earnings ratio of a company is higher than the average for other companies in the same business sector, the stockmarket expects the company to achieve higher than average earnings per share in the foreseeable future to justify the above-average valuation of the shares.

In certain circumstances, the explanation may be quite different. For example, a takeover bid for the company may be widely expected, and the share price has already increased significantly in anticipation of the price to be offered by the bidder.

It must never be forgotten than the analysis of share prices, and especially the prediction of future changes, cannot be done simply by calculating the various ratios. If this was possible, making a fortune on the stockmarket would be easy. In practice, even the most experienced investment-fund managers would make costly errors of judgment from time to time.

My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight

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Roles, Prestige, and Organization Value


A role is a part or a function performed by a person in a particular position or situation. With most roles that are associated certain expectations of behavior. For example, we expect anyone who is a company president to behave differently from a junior employee, or the foreman to behave differently from the workers, or the coach differently from the player. Thus, it is that if we know someone’s role (which is often indicated by his job title or assignment), we can make some reasonable predictions about some of his behavior, even though we do not know the person. If a particular person behaves differently than is generally expected of someone in his role, uneasy feelings, often negative, frequently result.

 In a given organization, various roles have to be performed, and each of them is likely to carry a certain prestige, the amount of which will depend on the importance of that role to the achievement of goals and on preconceived expectations of the role. For example, we expect the role of president to be more important that that of general manager, and more prestige is accorded to the president. The roles and prestige of individuals and groups are useful to note because they help influence behavior and interrelationships in significant ways. Think how role expectations might affect a general manager as he deals with the president, a shop foreman, a worker, and his secretary. If you think his behavior might differ, why do you think so?

 You can predict rather easily the prestige accorded certain individuals and groups and the roles they perform. Think for a moment how both things and space serve as status symbols in a business organization. Observation of such symbols help indentify the relative value assigned both individuals and groups.

 By noting the resources, things, and space allocated to work groups and people, and the nature and conditions of their work, and by considering these factors in the context of the total organization, we can often get good understandings of both their relative status in the organization and some of the factors influencing them. In addition, such observations indicating something about the values of the organization. By noticing the quantity and quality of various facilities and people, and by observing the things and help high-status people have (and low status people do and do not have), you can make reasonable deductions about the values of the organization. For example, you can tell something about the college that has a large new library and no stadium as compared with one that has a large stadium and a small library.

 My Consultancy–Asif J. Mir – Management Consultant–transforms organizations where people have the freedom to be creative, a place that brings out the best in everybody–an open, fair place where people have a sense that what they do matters. For details please visit www.asifjmir.com, Line of Sight