# Price Earnings Multiple Calculator - What is the Net Income?

## Price Earnings Multiple Calculator - What is the Net Income?

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Price Earnings Multiple Calculator - What is the Net Income helps calculating the Net Income given the Market Value and the Price Earnings Multiple

## What is Price Earnings Multiple?

The Price Earnings Multiple (often shortened to the P/E ratio or the PER) is the ratio of a company's stock price to the company's earnings per share. The ratio is used in valuing companies.

## The Formula of Price Earnings Multiple

Price Earnings Multiple = Price / Earnings

=> Earnings = Price / Price Earnings Multiple

## Example of Price Earnings Multiple

For example, if the market value of stocks equals 1,000,000 dollars and the net income equals - 100,000 dollars, the price/earnings ratio is 10

1,000,000 / 100,000

The Meaning is: an investor who buys the company for 1 million dollars, should wait for 10 years till he earns his money

The reason is - the company earns only 100,000 dollars per year.

## interperating Price Earnings Multiple

A lower price/earnings ratio is better

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