A price-earnings ratio or P/E ratio is calculated as a firm’s share price compar

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 accompanying table shows the 26 companies that comprise the Dow Jones Industrial Average and their P/E ratios as of July 23, 2010 (at the time data were retrieved, data on four firms were not available).

1. PE Ratio.xlsxPreview the documentView in a new window Calculate and interpret the 25th, 50th, and 75th percentiles.

2. Construct a box plot. Are there any outliers? Is the distribution symmetric? If not, comment on its skewness.

Explanation / Answer

25 ------------ 17

50---------- 33

75---------40

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