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A P/E ratio, also known as price-to-earnings ratio, is a financial metric used to determine the relative value of a company's stock price compared to its earnings per share (EPS).
In simpler terms, it is the price an investor is willing to pay for each dollar of a company's earnings.
A high P/E ratio indicates that investors have high expectations of the company's future growth potential, while a low P/E ratio implies lower expectations.
P/E ratios are one of many tools used by investors to evaluate a company's financial health and investment potential.