INTEREST EXPENSE Definition

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INTEREST EXPENSE is the cost of borrowing funds in the current period. It is shown as a financial expense item within the income statement. An interest expense of zero to <15% relative to operating income, within the consumer products industry, is an indicator of a sustainable competitive advantage.

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PRICE EARNINGS MULTIPLE: The price-earnings ratio (P/E) is simply the price of a companys share of common stock in the public market divided by its earnings per share. Multiply this multiple by the net income and you will have a value for the business. If the business has no income, there is no valuation. If the common stock in not publicly traded, valuation of the stock is purely subjective. This may not be the best method, but can provide a benchmark valuation.

PEG RATIO compares earnings growth and the Price Earnings Ratio. The PEG Ratio (formula) is the current Price Earnings Ratio divided by the expected long-term growth rate (per the earnings per share).

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