4 ms·
As an owner of company, valuation includes both profit withheld and dividend. Think you have 100% of a company with $100 in bank, it makes a profit of $20 and g
by blackoil 3y ago
As an owner of company, valuation includes both profit withheld and dividend. Think you have 100% of a company with $100 in bank, it makes a profit of $20 and gives $5 as dividend and keeps $15 so now has $115 in account. So, owner got $5 in cash and the book value of company is now 115, and future valuations will reflect on that.
- Sohcahtoa82 3y agoIn an ideal world, yes. But in the real world, company valuation is an entirely subjective matter that prices in expected future growth or losses.
- OJFord 3y agoIs it not clear from my parenthetical there that I understand that? > it earns (or rather pays out to in that period) the shareholder Comment I replied to was calling dividends, and only dividends, within a given year we're calculating P/E for no less, the company Earnings. That just isn't correct, whatever your views on valuation, shareholder ownership, and market efficiency.