Financial Ratio Calculator
Compute key financial ratios (P/E, ROI, margin, etc.) from input values.
Calculate key financial ratios including P/E, ROI, profit margins, and liquidity ratios with explanations. Complex calculations become simple with the right tools. Our tool supports 20+ financial ratio calculations. Our tool supports Ratio explanations and benchmarks.
How to Calculate & Interpret: P/E (Price-to-Earnings) Ratio
Formula: Current Share Price / Earnings Per Share (EPS)
Steps:
- Enter the 'Current Share Price' of the company (e.g., $150). This is the current market price of one share.
- Enter the company's 'Earnings Per Share (EPS)' (e.g., $5). EPS is the portion of a company's profit allocated to each outstanding share of common stock. EPS cannot be zero for this calculation.
- Click 'Calculate'.
Example: If a stock is trading at $150 per share and its EPS is $5, the P/E ratio is $150 / $5 = 30.
Interpretation: The P/E ratio helps investors determine the market value of a stock compared to the company's earnings. A high P/E could mean a stock's price is high relative to earnings and possibly overvalued. Conversely, a low P/E might indicate the current stock price is low relative to earnings, potentially undervalued. It's best used to compare companies in the same industry or against a company's historical P/E. A negative P/E (if EPS is negative) indicates the company is losing money.