P/E Ratio Calculator
A P/E Ratio (Price-to-Earnings Ratio) Calculator is a tool used to evaluate the relative value of a company’s stock. It compares the market price per share to the earnings per share (EPS) generated by the company.
The formula for calculating the P/E Ratio is: P/E Ratio = Market Price per Share / Earnings per Share.
For example, if a company’s stock has a market price of $50 per share and an EPS of $5, the P/E Ratio would be: P/E Ratio = $50 / $5 = 10. In this case, the P/E Ratio is 10, indicating that investors are willing to pay 10 times the company’s earnings per share for its stock.
The P/E Ratio is commonly used to assess the valuation and potential growth of a company’s stock. A higher P/E Ratio suggests a higher expectation of future earnings growth.