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RE: [sharechat] Newbie Question

From:	"Paul Jackson" <j+pjackson@xtra.co.nz>
Date:	Wed, 15 Dec 1999 12:12:32 +1300

Thanks for that Michael.

Perhaps you could just clear up one more question I have about this. If you say:

The PER or price earnings ratio is calculated by dividing the current market
price by the companies earnings per share. Earnings per share can becalculated a
number of ways but is usually the net profit after tax dividedby the average
number of shares on issue.The PER is a useful indicator of the value of a
company asit shows theamount of time (in years) for an investor to cover the
purchase price of hisinvestment from net profits.Last financial year end figures
are used to calculate these ratios againstthe current share price.

What is the relationship between PE & dividend yield? On the above example should the PE be 10 where the dividend yield is 10%?

Cheers

Paul

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