CSE to change methodology to calculate price multiples

May 04, 2016 (LBO) – Sri Lanka’s Colombo Stock Exchange (CSE) said it would use quarterly earnings to calculate price multiples from May 3, 2016.

The new method would use quarterly earnings instead of sourcing earnings from the annual results and calculating the price-to-earnings (P/E) ratio, price-to-book value ratio (P/BV) and dividend yield (DY)., a CSE statement said.

“The revised method would help to portray the current earnings trend in a timely and effective manner by taking into consideration the latest available financials of the company,” the CSE said.

“This is a globally accepted methodology that is adopted by exchanges around the world.”

It would be calculating the P/E and DY taking into consideration ‘rolling four quarterly earnings’ instead of the current practice of sourcing earnings from the annual results, it added.