In this paper, we present a comprehensive review on recent advances on the use of P/E ratio for measuring other firms’ characteristics. The survey has reviewed several studies on the relationship between P/E ratio and stock performance, estimation of transaction data, insider transaction, future growth, firm size, interest ratio, book-to-market equity, etc. | Price-to-earnings ratio A state-of-art review Accounting 3 2017 131 136 Contents lists available at GrowingScience Accounting homepage ac Price-to-earnings ratio A state-of-art review Mohammad Reza Ghaeli Adjunct Professor School of Management New York Institute of Technology 1700 - 701 W Georgia St. Vancouver BC V7Y 1K8 Canada CHRONICLE ABSTRACT Article history One of the primary tools for asset evaluation on stock market is to use price-to-earnings P E Received December 5 2014 ratio. The method is simple and has become popular among many investors for buy sell Received in revised format decisions. In this paper we present a comprehensive review on recent advances on the use of February 16 2016 P E ratio for measuring other firms characteristics. The survey has reviewed several studies Accepted July 1 2016 Available online on the relationship between P E ratio and stock performance estimation of transaction data July 27 2016 insider transaction future growth firm size interest ratio book-to-market equity etc. Keywords Price-to-earnings P E ratio Stock exchange 2017 Growing Science Ltd. All rights reserved. 1. Introduction The price-earnings ratio P E Ratio is the ratio for assigning a value for a firm that measures its current share price relative to its per-share earnings Nicholson 1960 . The price-earnings ratio is normally calculated as the market value per share divided by earnings per share. There are several methods for calculating P E ratios. EPS is normally extracted from the recent 4 quarters which forms trailing P E ratios and it can be measured by subtracting a firm s share value at the start of the 12-month period from its value at the period s end adjusting for stock splits in case there is any. Another form of P E ratio is associated with analysts prediction of earnings anticipated during the next 4 quarters called projected or forward P E Nicholson 1960 . Normally a high P E ratio implies that investors are .
