Bezuidenhout, Christiaan Willem (1995-12)
Thesis (MBA)--Stellenbosch University, 1995.
ENGLISH ABSTRACT: In spite of the significant role of price-earnings ratios on the Johannesburg Stock Exchange. relatively little is known of the behaviour of these ratios over time.
The price-earnings ratio is the price of the company's share. divided by the company's earnings per share. In a theoretically stable environment the interpretation of the price-earnings ratio is less problematic than in an everyday unstable. non-perfect market. The problem with a non-perfect market, is that the expectations and assumptions of investors start to play a role. This is difficult to quantify. To analyse price·earnings ratios now become problematic . Based on the formula for price-earnings ratio, one can say that it represents that
which the investor is willing to pay, for one rand of the earnings of the company. A high price-earnings ratio is a function of either a big expected growth in earnings for
the company, or a very small earnings for the company in that financial year. The purpose of this study is:
1) The accomplishment of a databank which reflects the relative rank of the different companies.
2) To establish the relationship of the rank of a given year with future ranks.
The study was conducted on all industrial companies on the Johannesburg Stock
Exchange. Price·earnings ratios calculated with share prices at financial year-end, as
well as price-earnings ratios calculated with share prices three months after the
financial year·end, were used in the study. Companies included in the study were
divided into groups which have been listed for 20. 15, 10 and 5 years respectively.
Descriptive statistical methods were used to find out more about the data. To
establish the extent of the relationships between the different ranks, Spearman's
rankorder coefficient was used. Finally a databank was established to show the
different relative ranks of the different groups.
Descriptive statistics indicated that price-earnings ratios are not disrtibuted normally.
The median was therefore used in all the groups as representative of the data. The
median showed a definite upward trend over time. The medians of the price-earnings
ratios calculated on the share prices three months after financial year-end, closely follow the medians of the price-earning ratios calculated on share prices at financial
year-end. This indicates that either investors do not take the earnings of the
companies into account, or that investors' expectations of earnings are correct. It is,
however, doubtful whether investors have sufficient information at financial
year-end. Spearman's rankorder coefficient showed a definite positive and significant trend.
especially if the time-span of the tests are taken into account. Companies which
were therefore ranked high, wilt most probably be high again the following year, if
the time-span does not exceed five years.
The databank which was established to show the relative ranks of the different
companies, showed that the so-called top companies do not necessarily fall into the top positions.
AFRIKAANSE OPSOMMING: Alhoewel prys-verdienste-verhoudings 'n belangrike rol op die Johannesburgse
Effektebeurs speel, is relatief min inligting beskikbaar oor die werking daarvan oor
die lang termyn.
Die prys-verdienste-verhouding is die prys van die maatskappy se aandeel, gedeel deur die verdienste per aandeel. Die interpretasie van prys-verdienste-verhoudings is
minder problematies in 'n teoreties stabiele omgewing as in 'n oorwegend onseker, nie-perfekte marksituasie. Die probleem in laasgenoemde tipe mark is dat
beleggersverwagtings en -aannames toenemend 'n rol begin speel. Aangesien verwagtings en aannames moeilik is om te kwantifiseer, bemoeilik dit ook die interpretasie van prys-verdienste-verhoudings. Volgens die formule verteenwoordig prys-verdienste-verhoudings dit wat beleggers
bereid is om te betaal, vir een rand verdienste van die maatskappy. 'n Groot
prys-verdienste-verhouding is 'n funksie van groot verwagte verdienstegroei van die
maatskappy, of 'n baie klein verdienste per aandeel vir die maatskappy in daardie betrokke finansiele jaar.
Die doel van die studie is:
1) Die daarstelling van 'n databank van prys-verdienste-verhoudings wat die
relatiewe rangorde van die verskillende maatskappye reflekteer.
2) Vasstelling van die verband tussen rangordes van 'n bepaalde jaar en toekomstige rangordes .
Die studie is gedoen op alle industriële maatskappye op die Johannesburgse Effektebeurs. Prys-verdienste-verhoudings bereken volgens aandeelpryse op
finansiële jaareinde, asook die bereken op aandeelpryse drie maande na afloop van
die finansiële jaareinde van die betrokke maatskappy , is by hierdie studie ingesluit. Maatskappye is in vier groepe verdeel naamlik maatskappye wat onderskeidelik al
20, 15, 10 en 5 jaar genoteer is. Ter toeligting van hierdie data in die verskillende groepe, is beskrywende statistiese metodes gebruik en geinterpreteer. Spearman se
rangorde korrelasiekoëffisient is gebruik om die omvang van die verband tussen
rangordes vas te stel. 'n Databank is laastens opgestel vir die verskillende groepe wat relatiewe rangorde aantoon.
Volgens die beskrywende statistiese metodes is die prys-verdienste-verhoudings nie
normaal verdeel nie. Die mediaan is dus in alle groepe as verteenwoordigend van die data gebruik, in plaas van die gemiddelde. Die mediaan het in alle groepe 'n skerp
stygende tendens oor tyd getoon. Mediane van prys-verdienste-verhoudings bereken
op aandeelpryse drie maande na die finansiële jaareinde, het 'n sterk ooreenkoms getoon met mediane van prys-verdienste-verhoudings bereken op finansiële jaareind
aandeelpryse. Dit kan 'n gevolg wees van of die feit dat beleggers hulle nie veel
steur aan die verdienstes van maatskappye nie, of dat beleggers se verwagtings van
die maatskappye se verdienstes korrek was. Dit is egter te betwyfel of beleggers op finansiële jaareinde oor genoegsame intigting beskik.
Spearman se rangorde korrelasiekoëffisient toon 'n definitiewe positiewe en
beduidende tendens, veral as die tydsduur van die toetse wat gedoen is in ag geneem word. Maatskappye met 'n hoë rangorde sal daarom waarskynlik ook die daaropvolgende jare 'n hoë rangorde hê, veral as die tydperk nie langer as vyf jaar is
nie. Volgens die databank wat saamgestel is om die relatiewe rangordes van die verskillende maatskappye se prys-verdienste-verhoudings aan te toon. hey, sogenaamde top maatskappye nie hoog in die hiërargie van top maatskappye
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