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Case/Exercise 26 uute the P/E ratio for PepsiCo as of its last annual report. (By now, you should be able to get the informat
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Answer #1

PepsiCo., Price to Earnings Ratio is 15.60

PE is calculated as Earnings per share divided by share price. PE ratio of 15 depicts the scenario that for other fifteen years the earnings are going to stay constant. But when company loses it's money, PE ratio doesn't really matter. PE ratio is helpful in deciding the earning capacity of the company. PE ratio shows the growth of a company, and being a shareholder , one would want to earn back the money he has invested.

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