Glossary A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z | 1 | 3 | 4 | 5 Definitions by InvestorWords.com   What is...? Price/Earnings Ratio (P/E ratio) The most common measure of how expensive a stock is. Equal to a stock's capitalization divided by its after-tax earnings over a 12-month period, usually the trailing period but occasionally the current or forward period. The value is the same whether the calculation is done for the whole company or on a per-share basis. Equivalently, the cost an investor in a given stock must pay per dollar of current annual earnings. also called earnings multiple. see also ratio, price to book ratio, earnings yield, forward P/E, trailing P/E, PEG ratio, high-flyer. Copyright ©2009 by InvestorGuide.com. All Rights Reserved.