Income Statement Evolution Finances - Leverage
Price Earning Ratio
Capital Asset Pricing Model DEFINITION A valuation ratio of a company's current share price compared to its per-share earnings. Calculated as: Market Value per ShareEarnings per Share (EPS) For example, if a company is currently trading at $43 a share and earnings over the last 12 months were $1.95 per share, the P/E ratio for the stock would be 22.05 ($43/$1.95). EPS is usually from the last four quarters (trailing P/E), but sometimes it can be taken from the estimates of earnings expected in the next four quarters (projected or forward P/E). A third variation uses the sum of the last two actual quarters and the estimates of the next two quarters. So, what is Taobao? The company – owned by Alibaba Group, which is run by Jack Ma and CFO Joe Tsai – is basically a combination of the Amazon (AMZN) and eBay (EBAY) of China. Most investors over here think of Taobao as only an eBay clone. This is far from accurate. In 2010, based on research done on information in the public domain (such as various speeches given by analysts and competitors in China), I estimate Taobao did revenues of RMB 5 billion
(or roughly $770 million). Of that, RMB 4 billion came from ads on the site and the remaining RMB 1 billion from transactions.