A price-earnings ratio or P/E ratio is calculated as a firms share price compared to the income
Question:
A price-earnings ratio or P/E ratio is calculated as a firm’s share price compared to the income or profit earned by the firm per share. Generally, a high P/E ratio suggests that investors are expecting higher earnings growth in the future compared to companies with a lower P/E ratio. The following table shows the P/E ratios for a sample of firms in the footwear industry:
FirmP/E Ratio
Brown Shoe Co., Inc.......26
CROCS, Inc. ...........13
DSW, Inc. ...........21
Foot Locker, Inc. ............16
Nike, Inc. ...........21
Let these ratios represent a random sample drawn from a normally distributed population. Construct the 90% confidence interval for the mean P/E ratio for the entire footwear industry.
Step by Step Answer:
Essentials Of Business Statistics Communicating With Numbers
ISBN: 9780078020544
1st Edition
Authors: Sanjiv Jaggia, Alison Kelly