| P/E Ratio = | Market Value per Share |
 | |
| Earning per Share |
Hello Accelerated Math Students! As part of your Quarter 2 investment project, you will post on this blog using your holiday pseudonym. You will also comment on two other posts. EXTENDED DUE DATE: SUNDAY DECEMBER 11, 2016. The grades are now finished for the blog.
Sunday, December 11, 2016
What is the PE Ratio?
When I was researching for my investment project, I noticed that companies would use PE ratios. So what is a PE ratio? PE ratios stands for price to earnings ratio. According to Investopedia, PE ratios are used to see if a company is overvalue or undervalue. To calculate the PE ratio of a company you would get their market value per share and divided by their earnings per share. One example of PE ratio is, if the PE ratio is 10, this means investors in the stocks are willing to pay 10 dollars for each 1 dollar of the earnings the company generates(Investopedia).
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I still don't really understand how a PE ratio works, so if the PE ratio is a whole number other than one than doesn't that mean that the investors are loosing money, however if the PE ratio is a fraction or decimal than do the investors make money. My only question is how is the PE ratio properly used and what is the average PE ratio
ReplyDeleteI still don't really understand how a PE ratio works, so if the PE ratio is a whole number other than one than doesn't that mean that the investors are loosing money, however if the PE ratio is a fraction or decimal than do the investors make money. My only question is how is the PE ratio properly used and what is the average PE ratio
ReplyDeleteI still don't get the whole concept of PE ratio but I thank you for commenting this because if I see or hear this in the future I might be more familiar with it.
ReplyDeleteWhen I was doing my project, no site I went on ever mentioned PE ratio. This peaks my interest...
ReplyDelete