Financial Terms Glossary

P/E Ratio


Used for quoted companies. Calculated:- Price per share/Earnings per share. If share price is $10 and the company declares earnings of 50 cents then the P/E ratio is 20. Often stated as, 'the company is valued at 20 times its annual earnings'. A key market measure for analysts and investors.


Constantly discussed by analysts, and forever in the newspapers. Quoted minute by minute on every financial site. It simply compares the share price (and the total worth of the company) to the annual profits of the company. A million and one uses for this - but none of them relevant to getting an order, so get a life.

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