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