Seed Round for Alchohol Delivery App

  

T3 ENDEAVOR CANADA (British Columbia)

  

Blockchain enabled accounting platform

  

LP Opportunity - Phase 1 Resort Development - 67.5% ROI, Monthly Dist.

  

$500,000 - $20,000,000

  

Bridge the Indigenous Digital Divide with Sequorum's 1 Gbps Internet. 10% annual dividends. 605% ROI

  

Funding for real estate

  

Bison, the perfect alternative

  

Big Calm Tiny Homesteads

  

Camper Van Conversion with ACP & Marine Plastic Interior/ Soap friendly recirculating shower

  

Commercial-Scale Cannabis Production Facility (Legacy Health Canada Applicant)

  

Equity Investment Opportunity in Electronic Health Record and Telehealth Platform

  

Projects under way!Last Chance! Joint Venture with principal back in THREE MONTHS and ONGOING INCOME

  

15% ROI bi-annually return on $500K – Silent Investor – Expanding International Wireless Business –

  

DreamPlay - A live streaming platform for gamers. See deck, video, and website

  

Business Partner Wanted

  

Here's an opportunity for you and I.

  

SaaS platform to integrate Canadian housing financial

  

ROI of $3.8MM on $2MM in year 4. 22% average annual return.

  

Communication Corp.

  

Eden Earthworks

  

User-Driven Growth

  

Sustainable Product with Health Benefits and High ROI (46%)

  

Integrated Facility Operations & Supply model positioned for International expansion!

  

MHP Project Development - Vancouver Island

  

Hemp-infused, Alcohol-Free Sparkling Cocktails

  

CO2 recycling service

  

Written guarantee 100% ROI within 12 months on Done-For-You Ecommerce store

  

Hart & Caron Property Management Researching partnership

  

The most unexpected way to avoid being caught cheating.

  

Clear Choice Building Maintaince

  

Social Media App Growth Funding

  

Innovative Existing Product

  

Need money for my invention

  

Share Sale

  

Tiny Home Builder - With orders to fulfill

  

LoveBud Essentials Online Store

  

Invest in Lindsay, Ontario Development Project

  

Purple Puffers

  

Newly Acquired business looking for short term operating loan. Up to 18% APR.

  

 

Canadian Investment Network


Recent Blogs


Pitching Help Desk


Testimonials

"I'm very impressed with the level of professionalism of this network. I registered my request over three months now, and the response has been overwhelming; beyond my expectations. Although I have not closed any deals as yet, I'm still very hopeful. Keep up the good work!"
Verona Mustagal

 BLOG >> Recent

Price to Earnings Ratio [Finance
Posted on January 8, 2016 @ 11:40:00 AM by Paul Meagher

The price to earnings ratio, or P/E, is a important investment concept.

One reason it is important is because it provides a way to think about how to value the worth of a company. If your company is generating profits then you can use those profits to establish a value for your company. The value of your company is some multiple of those profits. The size of the multiple is the tricky part to figure out.

One factor that determines the size of the multiple is whether you are a private or publicly listed company. The economist Paul Samuelson calculated that, in a bull market, the multiple for a private company was 3 and a public company was 5. He used gross revenues as his measure of "earnings" instead of "profits".

Not all revenue streams are created equal. A profit in one industry might be worth more than the same amount of profit in another industry which would be reflected in higher Price/Earnings ratio in the former industry than the latter. Investors may see more potential for earnings growth in the former industry than the latter.

Yahoo Business publishes an Industry Summary that gives you a rough idea on the P/E for various industries. The "Catalog & Mail Order Houses" industry has an astounding P/E ratio of 955.60 (on Jan 11/2016) which, if you dig deeper, you see mostly reflects the value of Amazon in that industry segment.

The P/E value for different industry segments might tell you something about how to value your revenue stream. Shop around for what might be the best estimate of P/E for your industry. Again, using industry level P/E is only one way to guesstimate what your P/E might be.

My interest in P/E ratios was spurred by reading Marjorie Kelly's analysis of how public companies of the "extractive" type work (see my last blog on Generative Versus Exractive Ownership Design). In particular, I've been studying her systems diagram on some of the main factors influencing profit in a public company and the role that P/E plays.

In this diagram she illustrates how public company Profits can be increased by adjusting the factors in the bottom loop which can be magnified by the factors in upper loop. If Amazon increases it's profit by 1 million then this gets multiplied by a P/E of 955 which results in a 955 million increase in the valuation of the company. One can see that when Amazon declares a profit it has a bigger effect on company valuation than most companies in the world.

I think it is worth studying Marjorie's diagram for awhile to see if you agree or disagree with her analysis of how Profits in (extractive) public companies are determined - what she calls "the secret of the magic". I also think it is worth studying Marjorie's diagram because it will give you a richer understanding of the P/E ratio by relating it to other economic factors. A definition of the P/E ratio gives you one type of understanding, but seeing how it might work in a systems diagram gives you another type of understanding.

I do want to conclude, however, by pointing out that the P/E ratio is one tool you might use for the purposes of thinking about company valuation.

Permalink 

 Archive 
 

Archive


 July 2021 [1]
 June 2021 [1]
 May 2021 [2]
 April 2021 [3]
 March 2021 [3]
 February 2021 [1]
 January 2021 [1]
 December 2020 [1]
 November 2020 [1]
 June 2020 [3]
 May 2020 [1]
 April 2020 [2]
 March 2020 [1]
 February 2020 [1]
 January 2020 [1]
 December 2019 [1]
 November 2019 [2]
 October 2019 [2]
 September 2019 [1]
 July 2019 [1]
 June 2019 [2]
 May 2019 [3]
 April 2019 [5]
 March 2019 [4]
 February 2019 [3]
 January 2019 [3]
 December 2018 [4]
 November 2018 [2]
 September 2018 [2]
 August 2018 [1]
 July 2018 [1]
 June 2018 [1]
 May 2018 [5]
 April 2018 [4]
 March 2018 [2]
 February 2018 [4]
 January 2018 [4]
 December 2017 [2]
 November 2017 [6]
 October 2017 [6]
 September 2017 [6]
 August 2017 [2]
 July 2017 [2]
 June 2017 [5]
 May 2017 [7]
 April 2017 [6]
 March 2017 [8]
 February 2017 [7]
 January 2017 [9]
 December 2016 [7]
 November 2016 [7]
 October 2016 [5]
 September 2016 [5]
 August 2016 [4]
 July 2016 [6]
 June 2016 [5]
 May 2016 [10]
 April 2016 [12]
 March 2016 [10]
 February 2016 [11]
 January 2016 [12]
 December 2015 [6]
 November 2015 [8]
 October 2015 [12]
 September 2015 [10]
 August 2015 [14]
 July 2015 [9]
 June 2015 [9]
 May 2015 [10]
 April 2015 [9]
 March 2015 [9]
 February 2015 [8]
 January 2015 [5]
 December 2014 [11]
 November 2014 [10]
 October 2014 [10]
 September 2014 [8]
 August 2014 [7]
 July 2014 [6]
 June 2014 [7]
 May 2014 [6]
 April 2014 [3]
 March 2014 [8]
 February 2014 [6]
 January 2014 [5]
 December 2013 [5]
 November 2013 [3]
 October 2013 [4]
 September 2013 [11]
 August 2013 [4]
 July 2013 [8]
 June 2013 [10]
 May 2013 [14]
 April 2013 [12]
 March 2013 [11]
 February 2013 [19]
 January 2013 [20]
 December 2012 [5]
 November 2012 [1]
 October 2012 [3]
 September 2012 [1]
 August 2012 [1]
 July 2012 [1]
 June 2012 [2]


Categories


 Agriculture [74]
 Bayesian Inference [14]
 Books [15]
 Business Models [24]
 Causal Inference [2]
 Creativity [7]
 Decision Making [17]
 Decision Trees [8]
 Definitions [1]
 Design [37]
 Eco-Green [4]
 Economics [12]
 Education [10]
 Energy [0]
 Entrepreneurship [68]
 Events [2]
 Farming [20]
 Finance [25]
 Future [15]
 Growth [19]
 Investing [25]
 Lean Startup [10]
 Leisure [5]
 Lens Model [9]
 Making [1]
 Management [9]
 Motivation [3]
 Nature [22]
 Patents & Trademarks [1]
 Permaculture [36]
 Psychology [2]
 Real Estate [3]
 Robots [1]
 Selling [12]
 Site News [17]
 Startups [12]
 Statistics [3]
 Systems Thinking [3]
 Trends [9]
 Useful Links [3]
 Valuation [1]
 Venture Capital [5]
 Video [2]
 Writing [2]