ALL ABOUTE P/E RATIO

Know advantage of P/E RATIO and your profit in investment, formula of calculate and more secret info about P/E ratio.

What is Full form of P/E RATIO?

FULL FORM OF PE RATIO IS PRICE TO EARNING RATIO.

IN stock market you invest without knowing a p/e ratio of a company than you CUT OWN THROAUT.

LET’S learn a most interesting thing of stock market;

PE RATIO mostly use in stock market for knowing stock are in undervaluation or overvaluation. PE RATIO easily help full for know the true value of stock. P/E ratio is show the relation between market price of share and earning capacity of company per share.

So we are UNDERSTAND PE RATIO with example;

HDFC PE RATIO IS 23.69 ; its means you invested 23.69 rupees in HDFC share than you earn 1 (one) rupees from above example I hope you understand easily the use of PE RATIO.

HOW TO WE FIND OUT PE RATIO OF ANY COMPANY;

In 20th century calculation of PE ratio is very complicated. If need to know how much p/e ratio of any company you personally need to calculate p/e ratio of company. But today PE ratio is available easily on your broker app or NSE OR BSE website or other platform…

FORMULA OF PE RATIO ;

PE RATIO = (market price of share)share price/ Earning per share (EPS) EPS;

Lets I tell you interesting thing about EPS = if company’s EPS Is 10 than you not earn from company rupees 10. But rupee 10 is a per share part of total divided net profit.

EPS FORMULA IS = TOTAL EARNING OF COMPANY(NET PROFIT)/ TOTAL OUTSTANDING SHARE OF A COMPANY

LET’S we understand one more thing is a what is outstanding share = outstanding share capital is which capital those share issued by company to there investor, employee of company or hold by promoter of company its all share called outstanding share of a company.

pe ratio is 12 Month p/e ratio,
4 month p/e ratio etc..3 month Because in different time line you see different p/e ratio. most of the time investor use quarterly p/e ratio, annually p/e ratio, or monthly p/e ratio..

PE RATIO effectively work when you use pe ratio with comparison of one company to same time of industrial company and you get best result. Because every industry have different PE RATIO because of earning opportunity.

Ex; if you like to be invested in sbi bank than you compare sbi bank p/e ratio with any of the banking sector company don’t compare with other sector company.

The reason is IT SECTORE have a more pe ratio because investor hope in Indian IT SECTOR. So don’t only use PE RATIO use other ratio for more effective analysis ;like,PB RATIO,DPS,CRR,EPS etc..

If you are interesting in investing in stock market we serve you a great knowledge of investment and personal finance.

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