The price-to-earnings ratio (P/E) is a financial metric used to evaluate a company's current share price relative to its earnings per share (EPS). This ratio is significant because it provides insights into how much investors are willing to pay for each dollar of earnings, helping assess whether a stock is overvalued or undervalued. The P/E ratio is especially important when making financial statement adjustments and is often referenced in the standards set by professional appraisal organizations.
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