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The market share of a company represents their share in market’s total sales over a certain period of time. In addition to this, the market share of a company could be calculated by dividing their sales by the total sales of industries over a period of time. It is a metric which helps in understanding the size of the company as per the market and competitors. There are various elements through which the market share of a company would increase or decrease. The investors constantly analyse the market share of a company like they are increasing or decreasing because it helps them in understanding the growth of a company.
The investors use different tools in order to analyse the market share of a company. A tool named price earnings ratio is majorly used for analysing the price of their shares such that they are profitable to them or not (Khan, et al. 2011). In addition to this, the buying behaviour of the investors is affected by the under-price and over-price of share. In order to know the value of the share, the current price of the share in the market is divided by the earning of share. Further, there are other methods also which could be used for calculating the price-earnings ratio. In the current market, trailing method is used by investors but this method is criticized on the basis of a fact that investors only focus on the growth of a company. The other method isforecasted ratio as it helps in the calculation of ratio. The ratios are helpful in analysing the condition of a company and on the basis of it, the future prediction could be made. The flaw in this method is that it has higher chances of risk (Hashemijoo, et al. 2012). In this report, we would be choosing the trailing method for conducting our research.
Lutfi (2016) has conducted a research in Jakarta Islamic Index in order to analyse the influence of factors in affecting the price-earnings ratio and the shares of a company. The research methodology was based on certain observations which analysed the certain influence of elements and factors over a specific area. The data which was used in order to analyse the factors were secondary data. Around 45 observations were conducted during the research in order to collect the research sample for developing the hypothesis. Then the hypothesis was tested with help of different types of tests like Simultaneous test i.e. F-Test and Partial Test i.e. T-Test. It was observed from the outcome of the observation that the price-earnings ratio of the shares in Jakarta Islamic Index had been affected by the total assets and debt to equity. Total assets have a negative and substantial influence over the price-earnings ratio on shares while the debt to equity has a positive and substantial influence (Williams &Naumann, 2011). In addition to this, it was also evaluated that the dividend payout ratios doesn't affect the price-earnings ratio of the shares in Jakarta Islamic Index but it has a positive but not substantial effect. Overall, the Price-earnings ratios have been influenced by three factors i.e. total assets, dividend payout ratio, and debt to equity.
Figure – Capilano Honey Limited
The major focus of the research of Karras, et al. (2007) is to analyse the sources through which the P/E ratio is episodic stationary. In order to conduct this research, Stock-Watson procedure has been used which decompose a certain model in order to bring change in the structure. According to the theory of P/E ratio, it is stated that the value of a company could be measured by dividing the current share price with per-share earnings. A different number of observations are conducted in order to analyse the P/E ratio is stationary or not.
From the observations, it has been depicted that the ratio of P/E is stationary and nonstationary during a period of time as they are not constant for a long time. In addition to this, it is also observed that inefficient market the ratio would be nonstationary. The outcome of one test named Dickey-Fuller test, state that the episodic trends of the market are nonstationary which occurred due to the efficiency of the market. Overall, it has been evaluated from the research that the fluctuation in market influence the P/E ratio and it further influence the volatility and structure. But the research has a limitation that the market of other countries was not considered for the overall result. In addition to this, it was also evaluated that the P/E ratio could be evaluated for the certain period of time.
According to Abraham, (2005) every stock has a substantial behaviour and the research was conducted by using the proxy for heterogeneous expectations in order to test the Miller Price Optimism Model. In addition to this, the behaviour of stocks is also analysed like the low differential stocks have a tendency to behave like value stocks while high differential stocks have a tendency to behave like glamour stocks. For analysing the stocks, the analyst forecast differentials had been measured for some stocks and then it was collectively taken with portfolios for a month. It had been depicted that when Miller model was supported, a low portfolio return would incur from high differential stock and the reason for it was great deviation among the rational analyst consensus forecasts and optimistic whisper forecasts.
Figure – Imports and Exports of China Dairy Corporation Limited
It has been evaluated from the observations that high differential stocks are incurring low returns in future as compared to low differential stock. Further, the glamour stocks had a resemblance to high differential stocks while the value stocks were the resemblance to low differential stocks (Asghar, et al. 2011). This research was conducted for a small period of time but it helps in evaluating that where investors should invest. Value stocks should be held by the long-term investor while the glamour stock held by the short-term investors.
Figure- Coca-Cola Amatil LimitedShare
[Source - http://www.sharecafe.com.au/mobile/roger_m.asp?a=AV&ai=29854]
Ghodrati&Ghanbari, (2014) has conducted research over Tehran Stock Exchange in order to analyse the influence if earning quality criteria on P/E ratio over 88 companies under the stock exchange. This research was conducted for a period of five year time and helps in evaluating that there was a positive and substantial relationship among the gross profit ratio and P/E ratio. In addition to this, it was evaluated that the relationship between the profit variability and P/E ratio was inverse to each other (Dempsey, 2010). Also, there was no substantial relationship between the deferrals variable and the dependent variable i.e. P/E ratio.
The relationships were generated with help of a regression model. The data which was used by the model helps in analyzing the relationships between the dependent variable and independent variables.
Chua, et al. (2015)has analysed the fluctuation of industry value due to the influence of options prices. In addition to this, the relationship between the option pricing and level of relative valuation is developed with help of deviation in put-call parity. For analysing the performance of models effectively different models are used. The models which are used in the observation are Model Fitting, In-Sample Test, Model Validation, and Out-of-Sample Test. It was observed that the P/E ratio is considered an important element as per the investment factor. During the research, it was also generalized that the retailers and investors analyse the investment opportunities with help of P/E ratio. The growth of a company is analysed with the high ratio and it also helps in making future decisions. In addition to this, if there was a change in P/E ratio then it would lead to a risk in the business. It is also evaluated from the study that fluctuation in industry level leads to influence the P/E ratio (Hussainey, et al. 2011). The investors analyse from the fluctuated industry levels of P/E that the price would also fluctuate but the option premiums would play a major role in maintaining the movement of price according to investors.
It has been analysed from the study of the research papers that price-earnings ratios depend on various elements. In addition to this, the influence of those elements affects the price-earnings ratios impacting the value of the share. For attaining the knowledge about price-earnings ratios we have conducted the exhausted literature review, peer-reviewed articles, and also analysed the latest published researches. After analysing the journals and research paper various aspects has been evaluated.
For analyses would be done in order to know the price-earnings ratios regarding the share of company i.e. they are over or undervalued(Avkiran, 2011). We have to analyse the ratio for four companieswhich areCapilano Honey Limited, China Dairy Corporation Limited, Coca-Cola Amatil Limited, and Collins Foods Limited. All the four companies are related to the private sector and they have a certain area in the market. Capilano Honey Limited conducts their operation in Australia as well as in other countries also which helps in gaining a huge market share. China Dairy Corporation Limited conducts their operation in all over Australia and competes with other dairy companies. Their revenue is highest among their competitors. Coca-Cola Amatil Limited works with help of their subsidiaries, distributes, and manufactures in order to sell beverages in Australia and other countries like Indonesia, Fiji, New Zealand, etc. Collins Foods Limited is a food outlet and restaurant in major parts of Australia and Asia. The information about the market share of these companies could be collected with help of different sources (Hjalmarsson, 2010). Analysing their market share from the legitimate sources would help in evaluating the P/E ratio effectively.
In order to collect the data for the research, various methods and techniques could be used. For collecting the data for a research two major methods are utilized i.e. qualitative and quantitative data. These methods would be used during the collection of data and if any problem occurred during the process it would be handled by them. Our research has been solely dependent on the statistical data which could be collected through the secondary research. The major focus of research is to collect data in order to identify that the share of the company is over-valued or under-valued.
Data collection and analysis
In order to collect data for the report, different methods have been used. The best method for collecting the data for this report is the literature review. There is a large number of reports, journals, studies, and papers which would help in carefully analysing the necessary areas for the research. In the initial phase of the data collection, the exhaustive literature review is conducted along with the latest published researches and peer-reviewed articles (Al-Shubiri, 2010). Analysing this data would be helpful in developing knowledge and certain hypothesis for the research. It is also analysed from the papers that statistical data would be needed for evaluating the market share of companies.
In addition to this, the reliable sources would also be taken into consideration for the collection of data. These sources could be the website of the company, financial report, annual report, and government sources. The company website would be helpful in providing the legitimate data of the company such that their revenue, profit, market share, etc. Thus source is very reliable than other sources. In addition to this, their financial and annual report would be available through different mediums which could help in deeply understanding the financial records of companies along with their revenue and profit from the different market. This would play an important role in analysing the P/E ratio. The other source which is much reliable to company's website is government sources. These sources provide the legitimate information about the company in terms of general market and the information is genuine and reliable (Fung, et al. 2012). The data would be collected from these sources and then the further analysis would be done in order to evaluate the price-earnings ratio.
Further, there are other sources which also provide the information about the company. These sources are websites like Mintel which provides the financial data and information about the company which is relevant and genuine. Data could be collected from this source for the analysis. When the data is collected from the sources an analysis would be conducted in order to complete the research by attaining the value of P/E ratio. Analysis the data of company would also be helpful in knowing the share price of companies. In addition to this, the collected data could be helpful in analysing the factors which affect the market share of companies like earnings per share, profitability, market value, etc.
It is known that for conducting a research an adequate amount is required. The amount which is required during the research would be utilized in different stages of the process. The literature review would cost a huge amount as a large number of papers, books, journals, articles and studies area analysed for collecting the data. In addition to this, a certain amount would be paid to the websites for collecting the data of companies (Azizkhani, et al. 2010). The data which is collected would require certain methods for the analysis and it would cost a certain amount. Overall, this is an academic research such that it would not cost an amount.
The element which plays an important role in developing the time schedule for a research proposal is Gantt chart. The Gantt chart comprises of various aspects which occurred during the research. Below a Gantt chart for the current research has been demonstrated.
PROPOSAL OF PROJECT
DATA COLLECTION PROCESS
DATA ANALYSIS STAGE
In first two weeks of the research, general framework for the research would be developed. Then from the second week, the literature review process would be started through different sources like research papers, journals, articles, and studies. In the third week, data collection process would start in which different sources would be used in order to collect the genuine and reliable data. The data which is collected from the source would be helpful in strengthening our assumptions and developing a strong framework (Regan, et al. 2010). When the data is collected from the sources then it would be analysed with help of certain methods in the fourth week. The major method which is used to analyse the collected data is Microsoft Excel. After analysing the collected data report outcome would be developed which helps in attaining the prime objective of the research.
After conducting the literature review of the data like journals, research papers, articles, and studies, knowledge has been developed for evaluating the desired outcome. It is observed from the literature review that statistical data is required for analysing the share of different companies. Then the collected data would be analysed with help of different tools for attaining the required information which could be further used in the research. After the data analyses, it would be easy to evaluate the data for calculating the price-earnings ratio of different companies (Kim, et al. 2011). The P/E ratio would be helpful in analysing the market share of companies such that they are under-valued or over-valued.
The data which is collected from the sources would be helpful in gaining a deep understanding of various aspects of the market like shares, equity, dividend, ratios, etc. The knowledge of these aspects would build a complete understanding of the finance areas. In addition to this, it helps in attaining our objective of understanding the correlation between the price of market share and earnings per share. The relationship between them is known as the price per earnings ratio i.e. P/E.
It is necessary during the research that the ethical issues should be handled carefully and effectively. In our research, every ethics is followed in order to avoid any type of ethical issues. We have followed the ethical rules for the research such as voluntary participation, consent, and confidentiality. During the voluntary participation, the persons who are connected to the research are involved without any coercion. In addition to this, every name of the person has been involved in the researchers whose work has been included in the research. Also, an informed consent is necessary to take for using their data for personal use. With help of the informed consent, the researcher would be aware that their data has been used under their consent. This would avoid any type of harm to the person at both physical and psychological level.
Further, it is important to safeguard the data of researchers from those who are not involved in the process of research directly (de Oliveira, et al. 2013). The confidentiality of data is maintained during the research such that the data of researchers is not used in an illegal manner. In addition to this, the name of every researcher has been used in this research whose data has been used such that giving the credibility of researchers.
Problems and limitations
In order to conduct a research, there are various types of problems which occurred during under it. The first problem of this research is time constraint as more time is needed to conduct the research and attain the desired result effectively. If the research conducted for a longer period of time then the proper research and analysis would be conducted which helps in gaining the desired objective. The next problem during the research is budget as certain resources would be unavailable due to the issue of budget. This research is based on the secondary data which is verified by other researchers such that there is a chance of error (Flint, et al. 2010). Also, this research is an academic research not a paid research such that the chances of error in the report are nominal.
It is evaluated from the aforementioned data that market share of a company helps in analysing the position of the company in the industry. In addition to this, the price-earnings ratio also helps in analysing the value of a shape such that they are profitable or unprofitable for an investor. Analysing the collected data in research helps in attaining a deep understanding of the different elements of market shares. The knowledge of these elements would be beneficial in future aspects and attaining the desired objectives.