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The relationships between the price-earnings ratio and selected risk and return and valuation models
Assignment (MAcc )--University of Stellenbosch, 2002.
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| Other Authors: | |
| Format: | Thesis |
| Language: | en_ZA |
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Stellenbosch : Stellenbosch University
2012
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| _version_ | 1867613773867515904 |
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| access_status_str | Open Access |
| author | Van Wyk, Tyrone |
| author2 | Brown, Willia |
| author_browse | Brown, Willia Van Wyk, Tyrone |
| author_facet | Brown, Willia Van Wyk, Tyrone |
| author_sort | Van Wyk, Tyrone |
| collection | Thesis |
| dc_rights_str_mv | Stellenbosch University |
| description | Assignment (MAcc )--University of Stellenbosch, 2002. |
| format | Thesis |
| id | oai:scholar.sun.ac.za:10019.1/53156 |
| institution | Stellenbosch University (South Africa) |
| language | en_ZA |
| last_indexed | 2026-06-10T12:41:28.315Z |
| license_str | Other — see source repository |
| provenance_str_mv | Harvested via OAI-PMH from SUNScholar — Stellenbosch University Repository |
| publishDate | 2012 |
| publishDateRange | 2012 |
| publishDateSort | 2012 |
| publisher | Stellenbosch : Stellenbosch University |
| publisherStr | Stellenbosch : Stellenbosch University |
| record_format | dspace |
| source_str | SUNScholar — Stellenbosch University Repository |
| spelling | oai:scholar.sun.ac.za:10019.1/53156 The relationships between the price-earnings ratio and selected risk and return and valuation models Van Wyk, Tyrone Brown, Willia Jacobs, L. Stellenbosch University. Faculty of Economic and Management Sciences. School of Accounting. Price-earnings ratio Stocks -- Prices Stocks -- Rate of return Risk Corporations -- Valuation Dissertations -- Accountancy Theses -- Accountancy Assignment (MAcc )--University of Stellenbosch, 2002. ENGLISH ABSTRACT: The price-earnings ratio is one of a series of benchmarks developed after the Great Depression, to measure the fair value of shares on a relative basis. It originated from the idea that investors buy the earnings of a company and that the price-earnings ratio provides a consensus indication of the future growth potential of a company. Therefore, the price-earnings ratio is a rating of a company's future profitability. The price-earnings ratio developed, over the years, firstly, into an indicator of the relative risk associated with a company as the market anomalies associated with the ratio were investigated and clarified, and the theoretical background of the ratio integrated with the portfolio theory. It is now clear that the price-earnings ratio can be a useful indicator of the risk associated with an investment and the uncertainty associated with the duration of the growth phase of a company. Secondly, the price-earnings ratio is also a growth and valuation model with a theoretical background that can be linked to popular dividend discount models and the growth opportunities approach to investment valuation. With the use of the price-earnings ratio it is easy to visualise the relative profitability and the total investment required to raise a company's rating of future profitability. This simplicity allows one the opportunity to evaluate the reasonableness and likelihood of the investment reaching its projected potential profit targets. Lastly, as a result of accounting changes and the different accounting rules in force today, the price-earnings ratio also assists in the identification and elimination of the effects of accounting on investment decisions. It is apparent that the price-earnings ratio possesses the capabilities to assist investors significantly with the analysis of investment opportunities. AFRIKAANSE OPSOMMING: Die prys-verdienste verhouding is een van 'n reeks relatiewe maatstawwe ontwikkel na die Groot Depressie om die redelike waarde van aandele te bepaal. Dit is gebaseer op die idee dat beleggers die winste van 'n maatskappy koop en dat die prys-verdienste verhouding 'n konsensus aanduiding verskaf van die toekomstige groeipotensiaal van 'n maatskappy. As gevolg hiervan is die prys-verdienste verhouding 'n aanduiding van die relatiewe toekomstige winsgewendheid van 'n maatskappy. Die prys-verdienste verhouding het oor die jare ontwikkel, eerstens as 'n aanwyser van die relatiewe risiko verbonde aan 'n maatskappy soos abnormaliteite wat daaraan verwant is ondersoek en verklaar is, en die teorieë onderliggend aan die verhouding ontwikkel het saam met die portefeulje teorie. Dit is nou duidelik dat die prys-verdienste verhouding 'n bruikbare aanduider is van die risiko wat geassosieer word met 'n belegging en die onsekerheid wat gepaard gaan met die duur van die groeifase van 'n maatskappy. Tweedens is die prys-verdienste verhouding ook 'n waardasie- en groeimodel met 'n teoretiese agtergrond wat verband hou met die populêre dividend verdiskonteringsmodelle en die groeigeleenthede-benadering tot waardasie. Met die gebruik van die prys-verdienste verhouding is dit maklik om die relatiewe winsgewendheid en die totale belegging wat benodig word om die waarde van die relatiewe winsgewendheid van 'n maatskappy te verhoog, tevisualiseer. Hierdie eenvoud verskaf die geleentheid om die redelikheid en die waarskynlikheid van 'n belegging om sy voorsiene winsgewendheidsdoelwitte te bereik, te evalueer. Laastens, as 'n resultaat van die rekeningkundige veranderinge, en die verskillende rekeningundige reëls huidiglik van toepassing in die wêreld, help die prys-verdienste verhouding ook met die identifikasie en die eliminasie van rekeningkundige komplikasies op beleggingsbesluite. Dit is duidelik dat die prys-verdienste verhouding die vermoë het om die belegger by te staan met die ontleding van beleggingsgeleenthede. Masters 2012-08-27T11:35:19Z 2012-08-27T11:35:19Z 2002-12 Thesis http://hdl.handle.net/10019.1/53156 en_ZA Stellenbosch University 250 p. : ill. application/pdf Stellenbosch : Stellenbosch University |
| spellingShingle | Price-earnings ratio Stocks -- Prices Stocks -- Rate of return Risk Corporations -- Valuation Dissertations -- Accountancy Theses -- Accountancy Van Wyk, Tyrone The relationships between the price-earnings ratio and selected risk and return and valuation models |
| title | The relationships between the price-earnings ratio and selected risk and return and valuation models |
| title_full | The relationships between the price-earnings ratio and selected risk and return and valuation models |
| title_fullStr | The relationships between the price-earnings ratio and selected risk and return and valuation models |
| title_full_unstemmed | The relationships between the price-earnings ratio and selected risk and return and valuation models |
| title_short | The relationships between the price-earnings ratio and selected risk and return and valuation models |
| title_sort | relationships between the price earnings ratio and selected risk and return and valuation models |
| topic | Price-earnings ratio Stocks -- Prices Stocks -- Rate of return Risk Corporations -- Valuation Dissertations -- Accountancy Theses -- Accountancy |
| url | http://hdl.handle.net/10019.1/53156 |
| work_keys_str_mv | AT vanwyktyrone therelationshipsbetweenthepriceearningsratioandselectedriskandreturnandvaluationmodels AT vanwyktyrone relationshipsbetweenthepriceearningsratioandselectedriskandreturnandvaluationmodels |