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Lesson 7 of 8 · 3 min

Reading the numbers

These numbers tell you how much a company costs, how well it earns, and how much it owes. Tap each one and move the sliders to see how it works.

A pretend company · tap a number

Share price$100
Profit per share, per year$5

The company has 100M shares. Drag a slider and watch the number on the right.

What it means

P/E ratio
20.0x
About typical
Black tick: a typical level for the market (22x)
What just happenedP/E is the share price divided by the profit each share earned in a year. At 20.0x, you pay $20 for every $1 the company earns each year. A higher number means you pay more for the same profit.
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