In this work an attempt has been made to ascertain which factors are the main determinant of the price earnings ratio of a firm and how different financial efficiency measuring ratios are related with PE ratio of BSE100 companies? This study is focused on BSE100 and all companies except financial institution and some debt less firm are taken into consideration. The reference period of the study is fifteen years and is completely based on secondary data which has been collected from S EQUITY data base. This study used factor analysis which is use to find out which factors are more important in the estimation PE ratio and then pooling regression model is use to test the explanatory power (influences) of different financial efficiency measuring ratio (Assets turnover ratio, Sales turnover ratio, liquidity ratio, Capital structure ratio, and Leverage on companies’ PE. Method of Pool OLS is used to estimate the regression line. OLS is used because it minimizes the error between the estimated points on the line and the actual observed points of the estimated regression line by giving the best fit. All the dependent and independent variables are pooled cross section time series for estimation .Adjusted R2 is carried on to test level of significant of regression line. The findings of the study have put forth that some independent variables have significant estimation power to estimate PE of a company where as other independent variables have no explanatory power to the variability of PE of a company.
