Under Trailing P/E ratio we use the formula, P/E = (1+g)(1-b)/Re – g
I’ve a question, why do we take (1+g)? Mtlb in case of Trailing we take E toh instead of using (1+g) why don’t we just take the payout ratio of the previous 4qtr?
I know Sir had taught us the derivation but still while revising it came to my mind. So, please explain. Thank you!
trailing and leading P/E ration mei bs yhi difference hai ki hum konsa EPS lete hai. in dono ka difference do not depend on payout ratio. or 1+g issliye aata h kyoki hume EPS last year ka cheyiye hota hai.
Ok Chirag, Thanks!