This ratio shows how much an investor pays for every dollar of the company's earnings.
For example, if the P/E ratio = 20, this means that investors are willing to pay 20 dollars for every dollar of earnings.
Binance Academy
--
What is the price-to-earnings (P/E) ratio?
Key concepts
The price-to-earnings ratio reflects the amount that investors are willing to pay for each dollar the company earns, making it a quick way to evaluate whether an asset is overvalued or undervalued.
There are several types of price-to-earnings ratios — such as trailing, forward, absolute, and relative — that provide different perspectives, but all require context such as industry benchmarks and the company's growth potential.
The price-to-earnings ratio reflects the amount that investors are willing to pay for each dollar the company earns, making it a quick way to evaluate whether an asset is overvalued or undervalued.
There are several types of price-to-earnings ratios — such as trailing, forward, absolute, and relative — that provide different perspectives, but all require context such as industry benchmarks and the company's growth potential.
Disclaimer: Includes third-party opinions. No financial advice. May include sponsored content. See T&Cs.