1. What is Price Earning Ratio?

The Price Earning Ratio (PER) is a valuation ratio of a company's current share price compared to its per-share earnings. It indicates how much investors are willing to pay per dollar of earnings.

2. How Does the Calculator Work?

The calculator uses the PER formula:

Where:

• \( Price \) — Current market price per share
• \( Earnings \) — Earnings per share (EPS)

Explanation: The ratio shows the dollar amount an investor can expect to invest in a company to receive one dollar of that company's earnings.

3. Importance of PER Calculation

Details: PER helps investors determine the relative value of a company's shares and compare it with other companies in the same industry.

4. Using the Calculator

Tips: Enter the current price per share and earnings per share (EPS) in the same currency. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is a good PER value?
A: It varies by industry, but generally a lower PER might indicate a better value, though growth prospects should also be considered.

Q2: How does PER differ from P/E ratio?
A: They are the same - PER is just another name for P/E (Price-to-Earnings) ratio.

Q3: When is PER most useful?
A: When comparing companies within the same industry or comparing a company's current PER to its historical PER.

Q4: What are limitations of PER?
A: PER doesn't account for growth rates and can be distorted by accounting practices or one-time earnings adjustments.

Q5: Should PER be used alone for investment decisions?
A: No, it should be used in conjunction with other financial metrics and qualitative factors.