Final answer:
A P/E ratio is a measure of relative profit. It is calculated by dividing the price per share of a company's stock by its earnings per share. A higher P/E ratio generally indicates that investors have higher expectations for future earnings and are willing to pay more for the stock.
Step-by-step explanation:
A P/E ratio is a measure of relative profit. It stands for Price-to-Earnings ratio and is calculated by dividing the price per share of a company's stock by its earnings per share. A higher P/E ratio generally indicates that investors have higher expectations for future earnings and are willing to pay more for the stock.