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Spireframe Software, makers of Value Investor - the easiest way to learn stock analysis and valuation of stocks. Spireframe Software, makers of Value Investor - the easiest way to learn stock analysis and valuation of stocks.  
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Accounts Receivable Turnover
Altman’s Z Score
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Price to Earnings Ratio
Market Price of Common Stock 
 Price to Earnings Ratio =
Earnings Per Share

Explanation of Price to Earnings Ratio:

Also called the PE or P/E ratio, the Price to Earnings Ratio compares the Market Price of Common Stock to the Earnings Per Share.  This ratio is a quick measure of how "expensive" the stock of a company may be. 

Importance of Price to Earnings Ratio:

A company's stock may be heard as being "overvalued" - this ratio is the calculation often behind analyses like that. As the Earnings Per Share increase, or the Market Price of Common Stock decrease, the ratio will look better. 

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