What is the price-to-earnings (P/E) ratio?
- A Share price divided by earnings per share
- B Earnings per share divided by share price
- C Market capitalisation divided by revenue
- D Net profit divided by total assets
Answer
Share price divided by earnings per share
P/E shows what investors pay per unit of earnings. A high P/E may signal growth expectations or overvaluation, so it must be compared with peers.





