- profit accounting
- earn forex
I am trying to understand why PE ratio is calculated by: share price/EPS.
Actually what i do not get is that if a share is priced at £100 and the EPS is £10 you get a PE ratio of 10. Now if for the same share EPS is £20 the PE is 5. So with my calculation if a company has less profit its PE ratio gets higher. Should it not be the opposite?
Actually what i do not get is that if a share is priced at £100 and the EPS is £10 you get a PE ratio of 10. Now if for the same share EPS is £20 the PE is 5. So with my calculation if a company has less profit its PE ratio gets higher. Should it not be the opposite?
How to calculate PE ratio for a share?
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