Purpose and benefits

The price/earnings ratio (P/E) is simply the share price divided by earnings per share (EPS). While EPS is an actual amount of money, usually expressed in pence per share, the P/E ratio has no units, it is just a number. Thus if a quoted company has a share price of £100 and EPS of £12 for the last published year, then it has a historical P/E of 8.3. If analysts are forecasting for the next year EPS of, say, £14 then the forecast P/E is 7.1.

Related Solutions

Audience

For managers at all levels

Learning method

Management checklist, answers to FAQs, common traps, and suggested action plans.

Time to Complete

Length

Pages

Participants

Price

(inc. VAT)