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The Essential P/E: Understanding the stock market through the price-earnings ratio by Keith Anderson

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Chapter 4. Practical Calculation of EPS and the P/E from Company Accounts

We have now covered in detail the theory of how EPS and the P/E are calculated. Now we can put this into practice using a real-life example: Haynes Publishing, publishers of the famous motor manuals. For the sake of this exercise I shall evaluate the company in mid-2011 when its share price was 255p.

Profit

Haynes’ profit last year can be found in its latest annual report, available from the investor section of its website www.haynes.co.uk.

Figure 3: Extract of Haynes’ company report – profit and loss account

The top line of the income statement is revenue, ...

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