The Colombo Stock Exchange (CSE) said it would use quarterly earnings to calculate price multiples from Tuesday, May 3, 2016, instead of the current practice of sourcing earnings from the annual results.
“The revised method would help portray the current earnings trend in a timely and effective manner by taking into consideration the latest available financials of the company,” a statement said.
“This is a globally accepted methodology that is adopted by exchanges around the world.”
The new method would be used to calculate the price-to-earnings (P/E) ratio, price-to-book value ratio (P/BV) and dividend yield (DY).
The CSE said it would calculate the P/E and DY taking into consideration ‘rolling four quarterly earnings’ instead of the current practice of sourcing earnings from the annual results.