Price Earnings PE Ratio Definition & Application Wiki

Price Earnings PE Ratio Definition & Application Wiki

Last Updated by WikiWealth

PE Ratio Data

Short Definition

Price to earnings ratio; price divided by earnings. Used to make quick comparable measures between companies.

The P/E ratio (price-to-earnings ratio) of a stock (also called its "earnings multiple", or simply "multiple", "P/E", or "PE") is a measure of the price paid for a share relative to the annual income or profit earned by the firm per share. A higher P/E ratio means that investors are paying more for each unit of income. It is a valuation ratio included in other financial ratios. The reciprocal of the PE ratio is known as the earnings yield. The earnings yield is an estimate of expected return to be earned from holding the stock if we accept certain restrictive assumptions.

Long Definition

See Dictionary Terms

See Academic Resources

Source: http://en.wikipedia.org/wiki/PE_ratio