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Puru BhatnagarTop Contributor
Business Analyst, Entrepreneur, Business developer, Marketer
Asked a question 2 years ago

What is P/E ratio in terms of stock?

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Puru BhatnagarTop Contributor
Business Analyst, Entrepreneur, Business developer, Marketer

P/E ratio or price to earning ratio is a way throuvh which one can compare the company's current share value to its earning that is happened per share.

The other term given to P/E ratio is price multiplier or Earning multiplier.

This type of factor can be used to calculate or compare between the company's historical record or other companies in the market.

It is said that if the value of this ratio is high then the investor is expected to get hogh return in future.

There is basically two type of P/E ratio one is Forward and other is trailing ratio.

The formulae use to calculate the ratio is simple and all you have to do is just divide the price of the company's share to the earning that is expected per share.