Understanding PER,PBR,EPS,and BPS: Key Financial Indicators

The Relationship Between PER, PBR, EPS, and BPS

The following diagram illustrates the relationship between each of these indicators.

By simply looking at this diagram, you can intuitively understand how the indicators relate to each other.

The left side of the diagram represents the balance sheet, and the right side represents the profit and loss statement. The top part shows the market value, and the bottom part shows the number of shares outstanding.

The lines represent the connections between the indicators and evaluation items.

Below are detailed explanations of each indicator.

PBR (Price to Book Value Ratio)

Price to Book Value Ratio: The ratio of the stock price to the net assets.

= Market price ÷ Net assets

BVPS (Book Value Per Share)

Book Value Per Share: A financial indicator that measures the net asset value represented by each share of common stock.

= Net assets ÷ Outstanding shares

PER (Price to Earnings Ratio)

Price to Earnings Ratio: The ratio of the stock price to earnings.

= Market price ÷ Earnings

EPS (Earnings Per Share)

Earnings Per Share: A measure of the profit allocated to each share of common stock.

= Profit ÷ Outstanding shares