What is Price Earnings (P/E) Ratio?
Price Earning Ratio (P/E Ratio) measures the expectation of the investors. It basically indicated the price actually being paid in market for each rupee of Earning per Share (EPS). This ratio is important from investor’s point of view because if the P/E Ratio is high it will indicate the possibility of increase in EPS.
Formula for calculation P/E Ratio = Market Price Per Share / Earning Per Share