Introduction to the price-to-earnings ratio | Finance & Capital Markets | Khan Academy

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Price to Earnings Ratio (or P/E ratio). Created by Sal Khan.
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[@bychen5011]

"My son has been successfully subdued." --Sal Khan

[@siobhainb5891]

I am so impressed! Every year I seem to be using your videos to learn something new, and every year you are here knowledgeably, kindly, and thoroughly explaining another topic. Thank you!

[@cychooi8436]

i think your videos are really helpful. Especially for beginners like me who really need a full explanation on things. Please dont listen to those haters. They are arrogant idiots who thinks that they know everything and have no understanding towards others. Please do more video on valuation and investing. Because of your video make my learning journey is easier now.

[@von76]

Fantastic explanation…. Don't listen to the haters Great Job!

[@rameezimtiaz4556]

Literally a life saver!! Thank you for simplifying it

[@redplastic]

Loved this lesson! Thank you. I'm in the beginning stages of learning these things in investing and though I knew all the terms you've touched upon in this lesson, I wasn't able to connect all of them in the way that you have helped me to in seeing how they all fit together. This is something that even internet research wasn't able to get through to me and it just shows the importance of having a great teacher.

[@tiagomacedo6975]

Thank you for making this videos, i always been very interested in stock and now i can learn about it for free. I appreciate it, thank you

[@theagnosticindian3179]

Very insightful !. However I would recommend a playback speed of 1.25 to 1.5. Sal does beat around the bush before getting to the point.

[@pedalesmexicali]

That’s something I said before. He repeats himself a few times per video.

[@chocoboblue99]

Yeah, great video! That 10% earning in buying a stock and opening up a saving account bank for 2% is a great example. I'll probably go with the 2%. I know from buying and selling stock with the transactions fees will just get me to negative like I did before. lol

[@belovedsurfing7210]

Does anyone else hear an annoying buzzing in the background of the video. It makes me focusing on the material difficult. I hope the other videos in the series don't have the same problem. Thanks for the content.

[@darrenpalmer3109]

Excellent!!!! Why didn't I come to Khan Academy for this long ago?

[@brotherman1363]

Just what I sa

[@samratroy1234]

Its never too late to start learning

[@kingtigercrownestate9102]

So so much can be learned on this wonderful channel.

[@jamesliggins7553]

Your all over the place, stay on topic....

[@shwetatawlare7452]

M really becoming a fan of khan academy lectures. Most of the video I saw are a decade old. Can we have the upgraded version which includes ifs and buts from the 2008 recessions

[@Krishnasdog]

Great lesson. I never even thought about thinking of my bank account as having a PE ratio.

[@jkleopfer]

This guy knows his shit.

[@tennis12456]

Thank you for this video, i'm fairly new cto the stock market and trying to learn as much as possible. You really make iteasy to understand and you really know what you're talking about

[@rainhound4919]

thank you i needed this!

[@heinrichvanrooi175]

This is smart presentation . GREAT foundation.

[@thenorthfacesx11]

Insightful video, thank you.

[@sielecas]

First off let me start by saying these videos are awesome! I have a question on P/E ratios. How do you interpret a company with a negative P/E , basically what does that mean.

[@redplastic]

I know you're doing so many videos in different topics, but please do more under valuation/investing. Would it be possible for you to do lessons on technical/chart analysis? I don't know if this topic is on the borderline of what your mission for the academy is, but I'm hoping it's a legitimate request and I know you'll be able to make them in a way that adheres to the educational standard - which is what I would want as a student. Thank you, once again!

[@vinniepaz730]

amazing Sal. i love your way of explaining things. most people doing investment management are busy pulling in billions for their firms, but you take the time out to educate people like us and inspire us. thank you .

[@lvlaaloo]

i saw the video once and i already understand better the p/e ratio

[@tatsumakisempyukaku]

It would have been more clear to say that when you divide the price by earnings that the resulting quotient is the amount of money the investor has to pay or invest to earn $1.00 So in the video example $3.50/0.35= 10 So, if you buy 10 dollars of this stock you’d have about 2.857 shares. And 2.8571428 etc, multiplied by 0.35 is 0.999999 About a dollar.

[@gsparkway324]

The Earnings to Price Ratio that Sal came up with is actually called the "Earnings Yield"

[@mazmusicornament525]

EPS is derived from last 4 quarters, aka last full year. Thus p/e ratio reflects last years full 12 month earnings, in a ratio.

[@dhirenajudia4244]

Excellent learning...

[@angelaliu9188]

I have a question. If the price really did drop to $1.75 from $3.50, wouldn't that be good since the P/E ratio would be greater, resulting in a E/P ratio of 50%? So you'd be getting a 50% return rate?

[@silanath]

Hey, thanks for the nice stuff. Its really good video even for a beginners.

[@abeltasman70]

Thanks prof!

[@Andersxman]

Sorry, I meant: a price to book below 1. I just read that there is a Japanese small cap index that is trading at a price to book of 0,77 - that seems odd to me! A whole index trading at below the book value? What would you read in to this example?

[@shootshoot]

Hey, thanks mate. You even encourage me to teach others.

[@naivekinkon]

Great video! Thank you!!

[@Andersxman]

Hi Sal, could I ask you a question? If a company has a negative price to book value, what does that mean? It seems really strange to me that that it possible - why would you pay less for the share than what the assets minus the liabilities are actually worth?

[@allyssacooley7615]

I love your videos! Very relatable, I watch after I put my littles to bed 😂

[@Gilvids]

This guy goes off topic more than he needs too.

[@sarcasm707]

where can i find each individual industry p/e ratio? bc that affects when the whole market averages it out.

[@MahdiBanners]

great video. Thank you.

[@13WhiteFang37]

thanks alot!

[@iw.picassogaming6207]

Plz solve my problem Length of super normal growth=5years Growth rate in first 5 years =25% Stable growth rate after 5 years = 8% Beta=1.0 Treasury bond rate=6% Risk premium=5.5% Payout ratio in first 5 years =20% Payout ratio after 5 years=50% Also compute ROE in stable(normal) growth period.

[@c.marquez8821]

🕵

[@TheGeenat]

The stock that I’m invested in has a P/E 361.38. Can you explain that?..

[@AhWing89]

Great video

[@tusharmodi9883]

I have a question you mean to say in same sector companies when you are doing fundamental analysis on stocks the company with lower p/e are suitable?

[@babyunicorn2186]

I'm a bit late, but I'll shoot anyway. High P/E ratio is bad because that means low E/P ratio, which is the percent of return you will have assuming the company is stable. Therefore a company with a low P/E ratio is better than a similar company with a high P/E ratio. Hope I'm not too late :)

[@c.marquez8821]

@@babyunicorn2186 viewr from 2019. You're no late for everyone. New investors or traders reading through the comments for information. Thanks!

[@waelben2000]

In the Shark Tank TV Shaw, the sharks usually have a paper and a pen to know how much stake they want from the company. The other person offers them for instance 25% of the company for 500,000. He evaluated his company today to be worth $2,000,000. one of them said, then I'd have to get 121% based on your evaluation. how did he know he needs 121% of the company?

[@vashistaditya4150]

Legend, Legend, Legend!!

[@s0m0c]

What is a CD om a bank account?, thanks.

[@akkarim3]

I have a question, have you thought about this plan called the Intellitus Cash System? (google it). My brother says it makes people plenty of cash.

[@bluemew123]

o-o'....i...eUe LOVE MATH NOW U MADE ME LOVE MATH CONGRATZ

[@mic300391]

@bluemew123 You should thank him and congratulate yourself.. (:

[@kaushikmaulik5761]

If the company is in loss, what will happen?

[@whlrradio]

Why do they say "introduction?" What did he not explain????

[@SersonPerson]

I'm texting in class.

[@4wen_main]

Your words are clear but the characters are not xD, thank you

[@TFrills]

Midget company?

[@manishaparlour2201]

I don't understand hand writing

[@CarlosSpicyweiner52]

Lol now that my baby is subdued

[@bbruninn2]

Lets not give examples like Brazil when talking about country risk =P Im brazilian by the way (i also hate bolsonaro holy christ isnt that guy gonna give up?)

[@januastoria]

Yo can you stay on topic please, and stop going all over the place. Do you ADD? Seriously man stay on topic. Smh

[@MrSmashmouth07]

I'm more lost then ever b4 this guy was all over the place might know his stuff just not good instructor

[@ryanukulele6607]

You talk WAY too much, please stay on the topic.

[@benjaminedwards5254]

he makes it interesting...