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Price/earnings ratio (P/E ratio)
Strategic perspective
Financial perspective
Key performance question this indicator helps to answer
To what extent is the current share price attractive to investors?
Why is this indicator important?
Understanding how attractive your shares are to potential investors is useful. An assessment of relative share price attractiveness compared to the shares of rival companies provides managers with insights into the ease of attracting investment capital (i.e. current investor demand for a company share) as well as the attractiveness of potential takeover bids. If the share price is trading lower than it should, based on the earnings expected, a company will make an attractive takeover target.
The P/E ratio ...
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