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How to Calculate Price Earnings Ratio
2/9/2014 8:00:00 PM
Price-earnings ratio, also known as P/E ratio, is a tool that is used by investors to help decide whether they should buy a stock. The P/E ratio tells investors of a stock how much they have to pay for every $1 of earnings. A low P/E ratio is attractive in the sense that one pays less for every every $1 of earnings. At the same time, companies with higher P/E ratios generally expect higher earnings growth in the future than companies with low P/Es.
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