Investment analysis of the common stocks of selected California banks. - Page 85 |
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72
a n a p p r o p r i a t e m u l t i p l i e r * The in v e s tm e n t m u l t i p l i e r
i s a r e l a t i o n s h i p b e tw e e n e a r n i n g s and in v e s t m e n t v a l u e
a n d i n d i c a t e s how much a n i n v e s t o r i s w i l l i n g t o p a y f o r
e a c h d o l l a r o f e a r n i n g s f o r a bank s t o c k . T h e re a r e f o u r
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p a y - o u t r a t i o s . T hese f a c t o r s , i n c o n j u n c t i o n w i t h b ank |
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! B u s i n e s s A c t i v i t y and D e p o s it Volume I
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w h at one v a r i a b l e may be when t h e known v a r i a b l e i s a t a
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| c e r t a i n v a l u e . A q u ic k m ethod t o d e t e r m in e i f tw o
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| Title | Investment analysis of the common stocks of selected California banks. - Page 85 |
| Repository email | cisadmin@lib.usc.edu |
| Full text | 72 a n a p p r o p r i a t e m u l t i p l i e r * The in v e s tm e n t m u l t i p l i e r i s a r e l a t i o n s h i p b e tw e e n e a r n i n g s and in v e s t m e n t v a l u e a n d i n d i c a t e s how much a n i n v e s t o r i s w i l l i n g t o p a y f o r e a c h d o l l a r o f e a r n i n g s f o r a bank s t o c k . T h e re a r e f o u r o u t s t a n d i n g f a c t o r s w h ich i n f l u e n c e t h e c h o i c e o f an ! i i n v e s t m e n t m u l t i p l i e r . T h e se a r e : (1) p r i c e - e a r n i n g s ! r a t i o s , (2 ) e a r n i n g s s t a b i l i t y , (3 ) g r o w th , and (4) | p a y - o u t r a t i o s . T hese f a c t o r s , i n c o n j u n c t i o n w i t h b ank | m anagem ent and t h e i r p o l i c i e s , h e l p t o d e t e r m in e t h e p r o p e r i n v e s t m e n t m u l t i p l i e r t h a t i s a p p r o p r i a t e f o r e a c h i ! ! b an k s t o c k . T h is i s done i n a s p e c i a l c h a p t e r on i n v e s t - | i ! : m ent m u l t i p l i e r w h ich a p p e a r s l a t e r . ! I jI ! B u s i n e s s A c t i v i t y and D e p o s it Volume I i j j The d e p o s i t s o f a b an k p l a y a n i m p o r t a n t r o l e i n i i t 1 t h e b a n k Ts o p e r a t i n g e a r n i n g s b e c a u s e d e p o s i t s a r e t h e |t ma in s o' u r c e o f fu n d s f o r e a r n i n g a s s e t s . One a p p ro a c h 1 ii i n e s t i m a t i n g e a r n i n g s i s t o f i r s t e s t i m a t e w hat a b a n k ’ s i I d e p o s i t s may be i n t h e f u t u r e , su c h a s i n 1963• ! j Q u ite o f t e n e s t i m a t e s can be made from an a n a l y s i s i1 o f t h e r e l a t i o n s h i p b e tw e e n two v a r i a b l e s . I f a n a n a l y s i s l ! t ! r e v e a l s t h a t t h e r e i s a r e l a t i v e l y h i g h r e l a t i o n s h i p i * b e tw e e n tw o v a r i a b l e s , t h e n one m ig h t be a b l e t o e s t i m a t e j w h at one v a r i a b l e may be when t h e known v a r i a b l e i s a t a I | c e r t a i n v a l u e . A q u ic k m ethod t o d e t e r m in e i f tw o |
