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table [ [ , A , B , C , D ] , [ 1 , Firm,Return,PE , PS ] , [ 2 ,
tableABCDFirm,Return,PEPS
table
A research analyst is trying to determine whether a firm's priceearnings PE and pricesales PS ratios can explain the firm's stock performance over the past year. A PE ratio is calculated as a firm's share price compared to the income or profit earned by the firm per share. Generally, a high PE ratio suggests that investors are expecting higher earnings growth in the future compared to companies with a lower PE ratio. The PS ratio is calculated by dividing a firm's share price by the firm's revenue per share for the trailing months. In short, investors can use the PS ratio to determine how much they are paying for a dollar of the firm's sales rather than a dollar of its earnings PE ratio In general, the lower the PS ratio, the more attractive the investment. The accompanying table shows a portion of the yeartodate returns Return in and the PE and PS ratios for firms.
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