Unisa Student's Guide to Shares etc. Part 1 P:E ratio

To the uninnitiated the world of investment can seem to be an intimidating maize of terminology, ratios formulas, abreviations and the like.

For this reason I thought I would create a series of quick; easy-to-understand lessons. I am by no means an expert and my reason for creating this series is not completely altruistic. I know that the easiest way to reinforce your own knowledge is teach.

 What is a P/E Ratio ? 

The P/E ratio is the ratio between the price of a share and its average anual earnings. 


PE Ratio = Price of Share/Equity 
                  average annual earnings per Share

to follow soon:   Why is the P/E ratio important?

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