Price/Growth Flow

Posted in Finance, Accounting and Economics Terms, Total Reads: 303

Definition: Price/Growth Flow

Measure used to indicate how much a company spends on its research and development (R&D). A high ratio indicates that the company has very high earnings and is also spending significantly on its R&D while a small ratio implies the opposite.

It is calculated as follows:

Price/Growth flow = (Earnings per share + R&D per share) / Price per share.

But the drawback is that it doesn’t convey how successful is the R&D expenditure, that is, whether there are any innovative products coming out of the research.


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