Answer Posted / sk pasha
Price- Earning Ratio:- it expresses the relationship between
market price of one share of a company and the earnings per
share of that company. It's calculated as
Market price of Equity share
----------------------------
EPS
Profit after tax - Preference Dividend
here EPS = ---------------------------------------
Number of Equity Shares
(OR)
The P/E Ratio has a lot of practical application in
forecasting the market price of a share. there is no ideal
P/E Ratio.
The inverse of the P/E ratio is called the Earning yield.
It's calculated as
1 E.P.S
---------- or ----------------
P/E ratio Market Price
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