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Fast and slow: a closer look at payback periods

Companies whose profits would equate their market caps fastest and those which would require decades to do so

Fast and slow: a closer look at payback periods

Many investors use the price-to-earnings ratio as a go-to valuation metric. A related valuation measure is the payback ratio. It provides a better idea of the time required for a company's net profits to break even with its market capitalisation. It is calculated by dividing the company's current market capitalisation by the sum of the next five years' profit after tax. In our analysis, we slightly tweaked the payback ratio. We used the current market cap of the company and divided it


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