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Unformatted text preview: -to-earnings ratio,
commonly known as CAPE or Shiller P/E, is a
valuation measure usually applied to broad
● It is defined as price divided by the average of
ten years of earnings, adjusted for inflation. Cape 1881-2013 Cape (2) Cape (3) Sustainable growth
● Sustainable growth rate, or SGR, is the maximum pace
at which a company can grow revenue without depleting
its financial resources.
● This metric assumes that over the evaluation period:
a. the company will grow sales as rapidly as market
b. management is unwilling to sell new equity;
c. the company maintains it current capital structure
and dividend policy.
■ current capital structure <-> constant debt-toequity ratio Sustainable growth (2)
● As growth requires commensurate increases
in assets for support — without equity
issuance, any asset increases must be
funded with added lia...
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This document was uploaded on 02/23/2014 for the course CB 3410 at City University of Hong Kong.
- Spring '14