Price Earnings Ratio

Price Earnings Ratio (PE) = Price per share/Earnings per share.

Example:

If the after tax earnings of a company = $500,000 and there are 10,000,000 common shares issued, earnings per share = $0.05.

If the share price = $2.50, the Price Earnings Ratio = $2.50/0.05 = 50.

Usually stocks with high growth rates have high PE ratios.

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Reference Pages

Dividend Yield