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Instead of silently downvoting, how about telling me why I'm wrong. P/E is defined usually defined as `share price / earnings per share`. Market cap is `share
by Sohcahtoa82 3y ago
Instead of silently downvoting, how about telling me why I'm wrong.
P/E is defined usually defined as `share price / earnings per share`. Market cap is `share price * number of shares`. Via simple substitution, this means P/E is equal to `market cap / earnings`.
But calling P/E `share price / earnings` is simply incorrect.
- acchow 3y agoIn finance circles, the word you are using for "earnings" is usually called "net income" (or "net income for common stockholders"). When people say "earnings" they usually are referring to "earnings per share". In short: net income is total, "earnings" is "per share"