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Explain the term Price Earnings Ratio

Briefly explain the term Price Earnings Ratio (or P/E Ratio)?

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Price earnings ratio (P/E Ratio) is the ratio that is among the market price per equity and earnings per share. High Price Ratio is employed to give suggestion to the investors concerning their higher earning expected growth in prospect. It is generally employed to compare the two P/E Ratio of various companies that are from the same industry. Investors must carefully note problems that arises with P/E Ratio measure to evade biasing decision on many company's measure.

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