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QuestionsCategory: Valuation QuadrantNet Cash per share
Jeff asked 3 years ago

May I check with you that when plotting historical graph of PE, is it advisable to use earning adjusted by net cash/debt position and one-time extraordinary item? Or capture earning from FYE result would be adequately good enough?

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2 Answers
Victor Chng answered 3 years ago

Hi Jeff,
You can just plot the earning without adjusting for net cash/debt position but you have to exclude the one time extraordinary from it. 

Jeff replied 3 years ago

Thanks for reply.

When comparing current PE with historical PE it’s my understanding from course material that it’s required to adjust with cash/debt. In that case are we not comparing Apple to Apple ?

Victor Chng answered 3 years ago

Hi Jeff,
You only include the cash/debt position when you are calculating the intrinsic value but when comparing the current PE and historical PE range you do not need to include cash/debt.