Price/Earnings Ratio Calculator

# Price Earnings Ratio Calculator

Price/earnings ratio – also often called the **price to earnings ratio** or the **P/E ratio** – is a finance indicator that measures a company. Price Earnings Ratio is equal to share price divided earnings per share

**Formula us,**

P/E ratio = share price / earnings per share

**Let us consider,**

**Price per share**– the market price of a stock. This value heavily depends on the supply and demand on the market.

**Earnings per share**– the profit which a company gains from each outstanding share of common stock. If a company doesn’t have any net income, but only net losses, it won’t have a P/E ratio.

**Calculate the price/earnings ratio**

- Determine the market
**share price**. Let’s assume that it is equal to $25. - Determine the
**earnings per share**over the last 12 months. In our example, we’ll set this value to $1.80. - Use the price/earnings ratio formula:

P/E ratio = share price / earnings per share

P/E ratio = 25/1.80 = 13.9