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Sunday, August 21, 2011

How to Calculate Price Earnings Ratio

Price Earnings Ratio (P/E) is a commonly used valuation measure that compares the price of a share to the earnings per share. The higher the ratio, the more expensive the stock is relative to the earnings of the company.

Learn how to calculate the P/E ratio with the following example:

Robert Ltd has the following information:
Ordinary shares of $0.50 each: $400,000
10% Preference shares of

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