A P/E ratio stands for the price/earnings ratio. It is calculated by dividing the current stock price by current earnings per share. Earnings per share is determined by dividing earnings for the past 12 months into the number of common shares outstanding. The P/E ratio is an important indicator that many investors use to value a company.
Posts Tagged ‘EPS’
A P/E Ratio is…
Friday, October 16th, 2009Earnings Per Share is…
Friday, October 16th, 2009Earnings per share (EPS) is a company’s profit divided by its shares outstanding. If a company has $2 million of profit and has 2 million shares outstanding, then its earnings per share would be $1. This is just one of the measures of a company’s success.