## About This Tool

The online P/E Ratio Calculator is used to calculate the P/E ratio (price-to-earnings ratio).

## P/E ratio Definition

The P/E ratio of a stock is a measure of the price paid for a share relative to the annual net income or profit earned by the company per share.

## P/E ratio Calculation

The P/E ratio calculation formula is as following:

P/E ratio = Price per share / Annual earnings per share

## Example

Stock A is trading at $100 and the earnings per share for the most recent 12 month period is $5, then stock A has a P/E ratio of 20 (100 / 5).