How to Calculate Cyclically Adjusted Pe Ratio?

The CAPE Ratio (also known as the Shiller P/E or PE 10 Ratio) is an acronym for the Cyclically-Adjusted Price-to-Earnings Ratio. The ratio is calculated by dividing a company's stock price by the average of the company's earnings for the last ten years, adjusted for inflation.

How does PE ratio adjust to inflation?

Adjust these earnings for inflation using the consumer price index (CPI)—that is, adjust past earnings to today's dollars. Take the average of these real EPS figures over the 10 years. Divide the current level of the S&P 500 by the 10-year average EPS number to get the P/E 10 ratio or CAPE ratio.

How do you calculate the change in PE ratio?

P/E Ratio is calculated by dividing the market price of a share by the earnings per share. For instance, the market price of a share of the Company ABC is Rs 90 and the earnings per share are Rs 10. P/E = 90 / 9 = 10.