# Price to Earnings Ratio

Written by Jerry Ratzlaff on . Posted in Manufacturing Engineering

Price to earnings ratio, abbreviated as P/E, is a way of gauging wheather the stock price is high or low compared to the past or to other companies.

## price to earnings ratio Formula

 $$\large{ P/E = \frac{ MPS }{ EPS } }$$

### Where:

$$\large{ P/E }$$ = price to earnings ratio

$$\large{ EPS }$$ = earnings per share

$$\large{ MPS }$$ = market price of share