ACCOUNTING TERMS - ACCOUNTING DICTIONARY - ACCOUNTING GLOSSARY
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PRICE TO EARNINGS RATIO Definition
PRICE TO EARNINGS RATIO (P/E) is a performance benchmark that can be used as a comparison against other companies or within the stocks own historical performance. For instance, if a stock has historically run at a P/E of 35 and the current P/E is 12, you may want to explore the reasons for the drastic change. If you believe that the ratio is too low, you may want to buy the stock. You will generally find a P/E ratio based on either the prior reporting years earnings, or the earnings of the prior four quarters added together (LTM or Latest Twelve Months). Formula: Stock Price divided by the Earnings Per Share.
Learn new Accounting Terms
OPEN TO BUY is the dollar amount budgeted by a business for inventory purchases for a specific time period.
GROSS RECEIPTS is the total amount received prior to the deduction of any allowances, discounts, credits, etc.