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Tuesday, April 26, 2011

Price Earnings Ratio (P/E) Examples

Definition: Price Earnings Ratio (P/E) is calculated by dividing the market price of a stock by its most recent Earnings Per Share (EPS) value. It indicates how long the earnings will take to recover the cost of the shares. The higher the P/E ratio, the more the market is willing to pay for each dollar of company's earnings because it shows higher growth expectations.

Formula:
Price Earnings

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