What does P/E mean in General Business?
This page is about the meanings of the acronym/abbreviation/shorthand P/E in the Business field in general and in the General Business terminology in particular.
price/earnings ratio
Submitted by agnm on May 26, 2012
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Definition
What does P/E mean?
- p/e
- The price-earnings ratio, also known as P/E ratio, P/E, or PER, is the ratio of a company's share (stock) price to the company's earnings per share. The ratio is used for valuing companies and to find out whether they are overvalued or undervalued. P/E = Share Price Earnings per Share {\displaystyle {\text{P/E}}={\frac {\text{Share Price}}{\text{Earnings per Share}}}} As an example, if share A is trading at $24 and the earnings per share for the most recent 12-month period is $3, then share A has a P/E ratio of $24/$3/year = 8 years. Put another way, the purchaser of the share is investing $8 for every dollar of annual earnings; or, if earnings stayed constant it would take 8 years to recoup the share price. Companies with losses (negative earnings) or no profit have an undefined P/E ratio (usually shown as "not applicable" or "N/A"); sometimes, however, a negative P/E ratio may be shown.
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"P/E." Abbreviations.com. STANDS4 LLC, 2024. Web. 23 Apr. 2024. <https://www.abbreviations.com/term/1405414>.
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