Finance

Price to Earnings (P/E) Calculator

Find the P/E ratio.

Calculated Output

P/E ratio 20

Earnings yield (%) 5

Formula: P/E = price ÷ EPS

Step-by-Step Breakdown

1. Values used:

2. Share price = 40 $

3. Earnings per share = 2 $

5. P/E ratio = Share price / Earnings per share = 40 / 2 = 20

6. Earnings yield = 5%

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The math behind it

P/E = price ÷ EPS. The earnings yield is its inverse (1 ÷ P/E).

$40 ÷ $2 → P/E 20.

High P/E?

Implies high growth expectations (or overvaluation).