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Price to Earnings Ratio - The price to earnings ratio is the most common measure to determine how expensive stock is. It is usually calculated over a period of 12 months. The Price to earnings is the result of the capitalized value of stock, deducted by the earnings minus taxes over these earnings You can calculate it over 3 periods of time; the trailing period, the current and the forward period. The ratio's over the current and forward period are usually estimated ratios, the ratio over the trailing period is a current one. Usually the price to earnings ratio over the last year would be considered actual; this is the ratio that people most often work with.
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