Price to Earnings ratio.

The Price to Earnings ratio is the same.

Low Price to Earnings ratio implies that it's cheaper.

They'll say, this is 100 Price to Earnings Ratio.

The Price to Earnings ratio is equal to the price so 3.50 divided by the earnings per share.

We now know how to calculate the Price to Earnings ratio.

The average Price to Earnings ratio in the market right now

So in this case, the Price to Earnings ratio is 10.

The Earnings to Price ratio is just the inverse of this.

Price to Earnings.

But when you look at the Price to Earnings ratio, you say

You want to have a lower Price to Earnings ratio for the same asset.

Earnings ratio of 4.

So 10 price to earnings.

Price to Earnings of 10.

And you're going to pay a lower Price to Earnings ratio if the company isn't growing.

So first, just to learn what the Price to Earnings ratio is, let's just calculate it.

But when you lower the Price to Earnings you are increasing the Earnings to Price.

So growth is the other reason why you're willing to pay a higher Price to Earnings ratio.

Price to Earnings is 1.75 divided by 0.35, would now be a 5 Price to Earnings.

So based on 2008 earnings, the price to 2008 earnings for

Then all of a sudden the Price to Earnings ratio is starting to look a little bit better.

Higher Price to Earnings in Company B.

No one ever talks about the Earnings to Price ratio, but that's an interesting thing to even think about.

In a present period, you are willing to pay a higher Price to Earnings ratio if the company is growing.

Obviously a 6 Price to Earnings of 20 times 2013 earnings isn't as good as a 6 Price to Earnings of 2010, because earnings in the future aren't worth as much as earnings today.

So just when you look at it superficially right here, when you take Price to Earnings and actually just as a little aside, whenever someone says the Price to Earnings ratio is 10, or the Price to Earnings for Company B is 4, the first thing you should ask is, what earnings are you using?

So what are their respective Price to Earnings ratios?

So it has a Price to Earnings of 50.

Anyway, going back to Price to Earnings, we calculated the

My son has been successfully subdued, so I think this is a good time to learn about the Price to Earnings ratio.

The price to 2008 earnings for Company B is 4.

Price to Earnings, all else equal and that's a big thing all else equal, the lower the Price to Earnings, you're paying less for something.

I can do a Price to Earnings on my bank account.

For the same earnings you're paying a lower price.

It's hard to compare one Price to Earnings in one industry to another.

So now if you do a Price to Earnings on 2010 earnings so this is 18 months out from when this video is being made all of a sudden, your Price to Earnings relative to 2010 earnings is 4 for Company A.

So they both deserve at least a price to earnings of 10.

So you say, they both deserve a price to earnings of 10.

But here, the Price to Earnings for 2009 then becomes let's see.

I mean, companies go from a 10 to a 5 Price to Earnings.

Because you're getting the same earnings for a lower price.

Earnings ratio, and think about things like growth and stability and whatnot.

Why would someone be willing to pay a Price to Earnings ratio of 10 for Company A and pass up, or maybe not want to buy, Company B, even though they're paying only a Price to

If I'm paying 10 today for 2 of earnings in 2009, the Price to Earnings of 5 for Company A.