Sales & Business Development

Price-Earnings Ratio - Business concept of the day

GlobalLinker Staff
GlobalLinker Staff
GlobalLinker Content Team · Oct 11, 2018 · 1 min read
Price-Earnings Ratio - Business concept of the day

Definition: The Price-Earnings Ratio refers to a ratio of a stock price to company's earnings per share (EPS), This ratio is widely used to value companies, usually publicly traded companies.

Example: It is calculated by dividing the price of the stock by earning per share of the company. For example, if a stock is trading at $30 & its earnings per share for the year ended was $10, then Price-Earnings ratio will be 30/10 or 3. 

Business Insight: It is widely used by analysts to predict stock prices based on the earnings forecasts. 

 

GlobalLinker Staff
Written by
GlobalLinker Staff
GlobalLinker Content Team · Gurgaon · connections

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