The P/E ratio, that is, the Price-Earning Ratio, of a equity stock is a denominator to measure the cost of that particular equity stock. It is also called the earning multiple or simply multiple of that particular stock. Sometimes, it is written as P/E or PE. A lower P/E ratio indicates the availability of the stock at a relatively cheaper rate compared to its earning potentials.

P/E ratio is derived by dividing the Price per Share by Earning per Share.


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