Price/earnings ratio
Price/earnings ratio (alternatively known as P/E ratio) is a ratio calculated by dividing price per share by earnings per share. This shows how much investors are willing to pay per dollar of reported profits.
Definitions
According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),
- Price/earnings ratio (P/E ratio). Calculated by dividing price per share by earnings per share. This shows how much investors are willing to pay per dollar of reported profits.
According to Fundamentals of Financial Management by Eugene F. Brigham and Joel F. Houston (15th edition),
- Price/earnings ratio (P/E ratio). The ratio of the price per share to earnings per share; shows the dollar amount investors will pay for $1 of current earnings.
Related concepts
- Financial management. A combination of enterprise efforts undertaken in order to procure and utilize monetary resources of the enterprise.
