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How do I calculate the P/E ratio of a company?
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
To decide the P/E ratio, traders can divide the inventory charge with the aid of EPS.
Market VAlue of share divide by EPS
share price / earning per share = P/E ratio.
Answer will be in times.
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.) =..
