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The justified P/S ratio is calculated as the price-to-sales ratio based on the Gordon Growth Model. Thus, it is the price-to-sales ratio based on the company's fundamentals rather than . Here, g is the sustainable growth rate as defined below and r is the required rate of return. [1]
A cost-performance ratio with a positive value (i.e. greater than 1) indicates that costs are running under budget. [3] A negative value (i.e. less than 1) indicates that costs are running over budget. [3] However, a neutral cost-performance ratio (between 1.0 and 1.9) could suggest a certain degree of stagnation in the budget.
Learn about the mathematical problem of finding the shortest route that visits every city once and returns to the origin. Explore the history, applications, and algorithms of the travelling salesman problem.
Learn how economics uses graphs to illustrate principles and trends, such as supply and demand, IS-LM, and real GDP. See examples of different types of graphs and how to interpret them.
Robert Shiller's plot of the S&P composite real price–earnings ratio and interest rates (1871–2012), from Irrational Exuberance, 2d ed. [1] In the preface to this edition, Shiller warns that "the stock market has not come down to historical levels: the price–earnings ratio as I define it in this book is still, at this writing [2005], in the mid-20s, far higher than the historical average
Market power is the ability of a firm to influence the price of a product or service by manipulating supply or demand. Learn how market power is measured, regulated, and affected by different market structures, such as perfect competition, monopolistic competition, oligopoly, and monopoly.
Price elasticity of supply (PES) is a measure of how responsive the quantity supplied of a good or service is to a change in its price. Learn about the definition, determinants, types and examples of PES in economics.
The equilibrium of price competition is where the price is equal to marginal costs, assuming complete information about the competitors' costs. Therefore, the firms have an incentive to deviate from the equilibrium because a homogenous product with a lower price will gain all of the market share, known as a cost advantage.