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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