From Longman Business DictionaryPE ratioPˈE ˌratio or P-E ratio (also price-earnings ratio), written abbreviation PE ACCOUNTINGFINANCE a company’s share price divided by the amount of profits it makes for each share in a 12-month period. PE ratios are normally calculated on the base of all the profit made in the period, whether or not the profit is paid out to shareholders in that periodStatistics on earnings growth and P-E ratios are useful to money managers in determining which markets and individual stocks to trade.She recently began selling growth stocks with high PE ratios but knew that these could really suffer if the market turned down.We buy cheap shares with low P-E ratios that are out of favour with other investors. → ratio
