Hello Everyone, PE or P/E or Price multiple or Earnings multiple all refers to the same thing. This is one of the important metrics that is used when looking at a stock. To understand PE, we need to understand what P and E ( Earnings per share ) mean. P is easy to understand, It's the price of the given stock or we can take LTP(Last traded price). EPS(Earnings per share):- Firstly, It is calculated at the end of the fiscal year after the given organization’s financials are declared. Let's work with an example, if ABC Ltd has an outstanding share of 100000 at the end of the given fiscal year it has made a profit of 200000 for the same fiscal year then the earnings per share are as shown below. EPS formula :- 200000(Total Net Profit)/100000(Total Outstanding shares) = 2 per share NB:- The above formula can get complex in the real world but the basic concept is the same. This means, for each share, the shareholder holds
What is Stock Exchange and what does it do? The Stock Exchange is a place that provides software(Trading Engine software) that facilitates people to trade(Exchange, sell or buy) the stocks that they already own or are willing to purchase. In general, The stock Exchanges don't provide the software directly to retail clients to trade on; Instead, we have to find the authorized brokerage firm that is registered with Exchange. The brokerage companies provide us the Trading software. Most brokerages buy software from vendors specialized in building trading software. Stock Exchange is a marketplace. Where all the stocks that are listed on the Exchange are available for people to trade. The Stock Exchange is not responsible for stock price variations that happen on day to day basis. The people(traders) who buy/sell stocks contribute to price fluctuations. What is a Stock or Share? Stock or share are the words that are used interchangeably. Share is a portion of ownership in th