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Pretax earnings or profits |
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Pretax earnings or profitsNet income before federal income taxes are subtracted.Pretax earnings or profits Similar MatchesBand earningsBand earningsPay between the lower earnings limit and upper earnings limit which is used to determine National Insurance Contributions. Price earnings ratio (P/E ratio)Price earnings ratio (P/E ratio)P/E = current share price of a company divided by its earnings per shareA company with a share price of 100p and earnings per share (EPS) of 5p has a P/E ratio of 100/5 = 20.A company's P/E (also known as its multiple) shows how high its shares are priced in relation to its historical earnings. Although mathematically, it relates share price to past performance, the reality is that P/Es are more about forward expectations than the past. A high P/E indicates that the City expects the company's earnings to grow fast in the future.P/E 're-ratings' by the City can have a dramatic effect on share price. If a company regarded as a growth stock announces sharply reduced trading figures, fund managers may revise their view of the company, and decide that it doesn't justify a growth stock P/E of 20, and can only justify a more normal P/E of, say 12. If earnings were 10p share, that re-rating would suggest a change in share price from 200p to 120p.Equally, if a company announces some major technical breakthrough, or a major contract, the City may decide that its future earnings potential justifies a growth P/E, and re-rate it upwards from 12 to 20 (or equivalent figures). In which case the share price will leap.There is nothing formal about this re-rating procedure. It is simply buyers in the market pushing up the price to reflect a new perception of a company. But P/Es do tend to be comparative, in that companies in the same sector with similar prospects would normally have similar P/Es. If they don't, there is invariably a reason accounting for the difference. Net relevant earningsNet relevant earningsA person's pensionable income (that is, income from employment) plus taxable benefits in kind, less any allowable business expenses but before deduction of personal allowances. For self employed people these are taxable profits less capital allowances or losses from previous years. Earnings factorEarnings factorThis is a theoretical earnings figure that is used for working out state pensions or guaranteed minimum pensions. Earnings capEarnings capA term which relates to a person's final salary in an occupational pension scheme taken out on or after 1st June 1989 (or 14th March 1989 if the scheme was new at that time) and is the upper limit of earnings allowable under the scheme.The upper limit of net relevant earnings qualifying for tax relief in a personal pension plan, which in turn limits contributions. Further SuggestionsEarnings momentumFully diluted earnings per shares Earnings before interest and, taxes (EBIT) Earnings response coefficient earnings per share Earnings retention ratio Accounting earnings Earnings price ratio earnings yield Earnings before interest, taxes, depreciation, and amortization (EBITDA) normalised earnings State Earnings Related Pension Scheme Normalized earnings earnings Earnings before interest after taxes (EBIAT) Earnings Earnings Quality of earnings price earnings growth factor Primary earnings per (common) share retained earnings Earnings yield Earnings before taxes (EBT) Earnings before interest, taxes, and depreciation (EBITD) adjusted earnings |
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