LEARNING INVESTING -
STOCK MARKET LESSON PLANS - WORKSHEETS LESSON PLAN - CALCULATE PE RATIO
The Price Earning Ratio
WORKSHEETS AND LESSONS
What is the Price Earning Ratio?
A price earning ratio, or "P/E" for short, is a commonly used way to
simplistically value a company (determine what a company's stock should be worth). It is simply a company's stock price divided by a company's earnings per share.
The price to earnings ratio, also known as "P/E", is calculated by dividing the company's stock price by the company's earnings per share, or "EPS".
For example, if MSFT stock is $30 and has EPS
$1.00 of then PE is:
The P/E ratio gives you an indication of how
many times you are paying for a company's stock verse a company's
earnings. P/E ratios can be used to compare against other
companies, or against a company's own historical P/E ratio. It is
believed by some that a company with a high (large) P/E ratio is
expensive verse a company with a low P/E ratio, since with a high
P/E ratio you are paying a larger multiple verse a company's
Higher P/E ratio's are often associated with "growth
stocks", or companies that are growing faster than average.
The reason why some companies have a high P/E is because investors
believe that the company's earnings will be higher in the future.
P/E ratios can not be applied to companies without any earnings.
For these companies, other ratios or valuation techniques need to
The following worksheets provide an opportunity
to practice calculating the P/E ratio. Many of these worksheets are RANDOM and
customizable, so you may print out several different versions
depending on the skill level of your students.
Price Earning Ratio
Calculating the price earning ratio (P/E ratio)
This worksheet is for younger students.
Also good for division practice.
* Price Earning Ratio
Calculate the price earning ratio (P/E ratio)
This worksheet is for older money students.
Includes larger selection of company choices.