Calculate ROE and P/B
Before we can analyze the relation between ROE and P/B, we have to first calculate these variables. In this exercise, we will use data for the Consumer Discretionary firms that are in the S&P 400 Midcap Index, which are stored in the cons_disc
object. The values for ltm_eps
, bvps
, and price
for each firm are also stored in cons_disc
.
This exercise is part of the course
Equity Valuation in R
Exercise instructions
- Calculate Return on Equity.
- Calculate Price-to-Book ratio.
- Remove missing values from
cons_disc
usingcomplete.cases()
.
Hands-on interactive exercise
Have a go at this exercise by completing this sample code.
# Calculate ROE
cons_disc$roe <- ___
# Calculate Price to Book ratio
cons_disc$p_bv <- ___(cons_disc$bvps <= 0, ___, ___)
# Remove NA
cons_disc_no_na <- cons_disc[___, ]
head(cons_disc_no_na)