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Price-Earnings Ratio Formula

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The Price-earnings ratio (P/E ratio) is a valuation measure that compares the level of stock prices to the level of corporate profits, providing investors with a sense of a stock’s value. Check FAQs

PE = \frac{P}{EPS}

PE - Price-Earnings Ratio?P - Market Price per Share?EPS - Earnings Per Share?

Price-Earnings Ratio Example

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Here is how the Price-Earnings Ratio equation looks like with Values.

Here is how the Price-Earnings Ratio equation looks like with Units.

Here is how the Price-Earnings Ratio equation looks like.

4.5455 = \frac{50}{11}

4.5455 = \frac{50}{11}

4.5455 = \frac{50}{11}

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Price-Earnings Ratio Solution

Follow our step by step solution on how to calculate Price-Earnings Ratio?

FIRST Step Consider the formula

PE = \frac{P}{EPS}

Next Step Substitute values of Variables

∴

PE = \frac{50}{11}

Next Step Prepare to Evaluate

∴

PE = \frac{50}{11}

Next Step Evaluate

∴

PE = 4.54545454545455

LAST Step Rounding Answer

∴

PE = 4.5455

Price-Earnings Ratio Formula Elements

Variables

Price-Earnings Ratio

The Price-earnings ratio (P/E ratio) is a valuation measure that compares the level of stock prices to the level of corporate profits, providing investors with a sense of a stock’s value.

Symbol: PE

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Price-Earnings Ratio

Market Price per Share

Market Price per Share is simply the dollar amount that investors are willing to pay for one share of the company's stock.

Symbol: P

Measurement: NAUnit: Unitless

Note: Value should be greater than 0.

Formulas to find Market Price per Share

Earnings Per Share

Earnings Per Share (EPS) is the portion of a company's profit allocated to each outstanding share of common stock.

Symbol: EPS

Measurement: NAUnit: Unitless

Note: Value can be positive or negative.

Formulas to find Earnings Per Share

Other formulas in Solvency and Stock Ratio category

Go Debt to worth ratio

DW = \frac{TL}{NW}

Go Working capital

NWC = CA - CL

Go Accounts Payable Turnover Ratio

APTR = \frac{TSP}{\frac{BAP + EAP}{2}}

Go Earnings per share

EPS = \frac{E}{TSO}

How to Evaluate Price-Earnings Ratio?

Price-Earnings Ratio evaluator uses Price-Earnings Ratio = Market Price per Share/Earnings Per Share to evaluate the Price-Earnings Ratio, The Price-Earnings Ratio (P/E ratio) is a valuation measure that compares the level of stock prices to the level of corporate profits, providing investors with a sense of a stock’s value. Price-Earnings Ratio is denoted by PE symbol.

How to evaluate Price-Earnings Ratio using this online evaluator? To use this online evaluator for Price-Earnings Ratio, enter Market Price per Share (P) & Earnings Per Share (EPS) and hit the calculate button.

FAQs on Price-Earnings Ratio

What is the formula to find Price-Earnings Ratio?

The formula of Price-Earnings Ratio is expressed as Price-Earnings Ratio = Market Price per Share/Earnings Per Share. Here is an example- 4.545455 = 50/11.

How to calculate Price-Earnings Ratio?

With Market Price per Share (P) & Earnings Per Share (EPS) we can find Price-Earnings Ratio using the formula - Price-Earnings Ratio = Market Price per Share/Earnings Per Share.

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Price-Earnings Ratio Formula

Price-Earnings Ratio Example

Price-Earnings Ratio Solution

Price-Earnings Ratio Formula Elements

Other formulas in Solvency and Stock Ratio category

How to Evaluate Price-Earnings Ratio?

FAQs on Price-Earnings Ratio

Variable Name