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Price to Earnings (P/E) Ratio Calculator - Glossary:
Using our price to earnings ratio calculator, helps to compare, measure, understand the overall health of the business.
Price to Earnings (P/E) Ratio:
Price to Earnings (P/E) Ratio are used to measure the market price of company's stock market price to its reported earnings.
How to calculate?
Price to Earnings (P/E) Ratio = Market Value per Share / Earnings per Share
Earnings Per Share = (Net Income - Preferred Dividends)/Weighted Average Shares Outstanding
The values of Net Income and preferred dividend from the income statement and the weighted average shares outstanding from the balance sheet.
Profit before deducting all its interest & taxes.
Preferred dividends are cash distributions that are paid to the owners of a company's preferred shares.
Weighted Average Shares Outstanding:
Weighted average shares outstanding is a calculation that incorporates any changes in the number of outstanding shares over a reporting period.
Price to earnings (P/E) ratio for a company with a net income of $800,000, dividends pays out of $50,000 and a weighted average share outstanding of 75,000 with market price of $50 per share is 5 times. It means that, company stock is trading at a multiple of 5.
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