Binance Academy
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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.
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