Price to Earnings

Definition

The price-earnings ratio (P/E Ratio) is the ratio for valuing a company that measures its current share price relative to its per-share earnings. The price-earnings ratio indicates the dollar amount an investor can expect to invest in a company in order to receive one dollar of that companys earnings. This is why the P/E is sometimes referred to as the multiple because it shows how much investors are willing to pay per dollar of earnings.

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