Friday, February 23rd 2018

Question

# What is pe ratio in shares?

Interesting Question?   (4)   (19)

2nd Dec 2009 by JonB

The PE ration refers to the Price to Earnings ratio or multiple and which a stock is trading at. Since the actual price of a stock is dependent on how many shares a company has, the PE multiple is a way comparing shares to each other in an apples-to-apples kind of way. Think of it like this: If company XYZ is earning \$10 per share this year, how much would you be willing to pay for it? You may say \$10, but if you plan to hold that stock for 20 years and you think they are going to continue earning \$10 a year, it may be worth much more than \$10 to you. You may be wiling to pay \$20 or \$30 or more. That's where the multiple comes in. Usually stocks trade for many times what they make in a year. If you were willing to pay \$20 for a stock that earns \$10, thats a multiple of 2. Price divided by earnings = the ratio or multiple.

This answer is the subjective opinion of the writer and not of FinancialAdvisory.com

26th Nov 2009 In Stocks 1 Answers | 527 Views
Subjects: pe ratio,

What is pe ratio in shares?

What country is this answer relevent to? *

Enter Verification Number: *