Definition for : P/E ratio, PER, Price-to-earnings ratio

P/E ratio, one of the tools most commonly used for valuing a Share, is the ratio of the Share price to EPS. It can be also obtained by dividing the Market capitalisation by the Net income. Also called Trailing ratio.

(See Chapters Chapter 30 Risk and investment analysis and Chapter 32 Capital structure and the theory of perfect capital markets of the Vernimmen)

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