Saturday School: What Is the Price-to-Earnings Ratio?

Watch this video to learn why understanding the concept of the price-to-earnings ratio is one key to picking the right stocks to buy and sell.

Saturday School: What Is the Price-to-Earnings Ratio? Photo by violetkaipa / Shutterstock.com

Listen to any discussion of stocks, and you are bound to hear the term “P/E ratio.” But when the talking heads on CNBC utter the phrase, do you know what it means?

Watch this Khan Academy video to learn what the price-to-earnings ratio represents, and why it is crucial to understand the concept if you plan to buy individual stocks .

What indicators do you look for before you buy or sell a stock? Let us know in the comments below or on our Facebook page.

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