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How do I calculate the P/E ratio of a company?

How do I calculate the P/E ratio of a company?

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Question added by Mohammad Iqbal Abubaker , Jahaca Pty Ltd - Accounts Administrator , Jahaca Pty Ltd - Accounts Administrator
Date Posted: 2016/02/05
Frank Mwansa
by Frank Mwansa , ACCOUNTING LECTURER , FREELANCER

The P/E ratio measures the number of years over which the investment in shares will be recovered through earnings. It is a popular stock exchange ratio, also commonly described as an earnings multiple. Basically, the ratio means that it would take so many years to recover the current market price. It represents the market's consensus of the future prospects of that share. The higher the P/E ratio, the more the market has regard for a particular share. Similarly, the lower the P/E ratio the lower the expected future growth.

The price earnings ratio is calculated as Market value per share divided by earnings per share. ie

                    P/E ratio = Market value per share/earnings per share

Muhammad Mujtaba Shafique
by Muhammad Mujtaba Shafique , RJ , Dream Fm106

To decide the P/E ratio, traders can divide the inventory charge with the aid of EPS.

Deleted user
by Deleted user

Price to Earnings ..........................

Abdul Samad
by Abdul Samad , Internal Audit Supervisor , Al-Habib Consultants

Market VAlue of share divide by EPS

Huma Munawar
by Huma Munawar , Accountant , Afrina Group

share price / earning per share = P/E ratio.

Answer will be in times.

Mohammad Iqbal Abubaker
by Mohammad Iqbal Abubaker , Jahaca Pty Ltd - Accounts Administrator , Jahaca Pty Ltd - Accounts Administrator

To determine the P/E ratio, investors can divide the stock price by EPS. For example, Coca-Cola Co (KO) on June, traded at $. per share with an EPS (TTM) of $1., so the P/E ratio would be: Stock price ($.) / earnings per share ($1.) =..

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