The price to earnings ratio commonly referred to as P/E is merely the quotient of market capitalization and earnings. Alternatively, the P/E may also be deduced by determining the quotient of the share price and EPS which represents earnings per share. Both ways are viable and effective methods to calculate a company's P/E, and thus ultimately achieve the same outcome.
Market Capitalization
Earnings
or
Share Price
EPS
Note: Shiller P/E is simply the average of ten years earnings rather than one.
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