Stocks and Bonds
Lesson 24 of 36 · Price to Earnings (P/E) Ratio and Earnings Per Share (EPS) Explained · Basic studies
Price to Earnings (P/E) Ratio and Earnings Per Share (EPS) Explained
This video provides a basic introduction into the price to earnings ratio and earnings per share value. It explains how to calculate the P/E ratio using two simple formulas and how to calculate the EPS value using the earnings of a company minus any preferred dividends divided by the shares outstanding. The P/E ratio can be calculated by dividing the price of the stock by the EPS value. It can also be calculated by dividing the market capitalization of the company by the total earnings.
Disclaimer:
The information in this video is used for educational purposes only. It should not be construed as financial advice. I’m not a financial advisor nor am I recommending which stocks you should invest in. My goal in this video is to simply explain how things work. Investments in stocks involve substantial risk including total loss of principal. It is wise for you to do your own research and due diligence before making any investment decisions.