What is P/E ratio?
P/E ratio playes a vital role to select stocks in which a person should invest.
P/E ratio mean price earning ratio.
P/E=Market price of a share /Earning per share.
Suppose market price of a share is 200 and earning /share in last quater reasult 20.
So P/E ratio=200/20=10.
Ideal P/E ratio is 8 – 15.Don,t buy these share whose P/E is less than 5 and grater than 30.
If P/E ratio of a company is greater than 30 it indicates that market price is so high.
P/E ratio is less than 5 indicates that the share have some _ve point which I can not identified,but must have a -ve point.