Price to Earnings Ratio is calculated using the formula given below Price to Earnings Ratio = $40 per share / $4.00 per share Price to Earnings Ratio = 10.00x Therefore, the company’s stock is currently trading at a P/E ratio of 10.0x.
This ratio is also known as earnings multiple or price multiple. The formula for the P/E ratio is expressed as the share price or market value of the subject company divided by its earnings per share. Mathematically, it is represented as below,
Let’s take the example of Apple Inc. to Calculate PE Ratio Using Formula Annual Earnings per share for year ended Sept 30,2018 = $11.91 PE = 165.48/11.91 PE = 13.89x What is PE Ratio Formula? – Price to Earnings (PE) is one of the most popular ratios formulae that are being used by investors for valuing companies and taking investment decisions.