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Do you agree that if you multiply Earnings-Yield by Price-Earnings-Ratio, the result will always be one ? Why ?

Accounting Financial Reporting Financial Management
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Question added by Deleted user
Date Posted: 2014/08/10
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Jose Miguel Lucas Martins
by Jose Miguel Lucas Martins , IT Director - Robotic Process Automation (RPA) , Novo Banco

Yes, I agree, because as the earnings yield (shows the percentage of each dollar invested in the stock that was earned by the company, it computes as Earnings/Price and it is the inverse of the P/E ratio.

 

Therefore, Earnings-Yeld * Price-Earnings =1 as:

Earnings-Yeld = Earnings / Price

Price Earnings = Price / Earnings

 

Earnings / Price * Price / Earnings = Earnings / Earnings * Price / Price =1 *1 =1

Nancy Refai
by Nancy Refai , Health, safety and environmental management Trainer and consultant , Freelancer

yes because it's equal to; Earnings / Price (earnings-yield) * Price / Earnings ( price-yield)=1

Menerva Melad
by Menerva Melad , Account Executive, Key Accounts , Graphic Home Company

yes agree

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