Investing
Earnings yield
The inverse of the ratio, expressed as a percentage so it can be compared with interest rates.
The Formula
earnings yield = 1 / (P/E)
The inverse of the ratio, expressed as a percentage so it can be compared with interest rates.
| Symbol | Meaning | Unit | Notes |
|---|---|---|---|
| yield | Earnings yield | ratio | Profit as a percentage of the share price. |
| P/E | Price to earnings | multiple | The multiple being inverted. |
What Each Symbol Means
yieldratio
Earnings yield
Profit as a percentage of the share price.
P/Emultiple
Price to earnings
The multiple being inverted.
See It Worked With Real Numbers
A formula on its own does not tell you which number goes where. The how to calculate a price to earnings ratio page applies this equation to a concrete case, shows every intermediate step, and names the mistakes that produce a wrong answer even when the algebra is right.
Where This Formula Appears
This equation is the working core of How To Calculate A Price To Earnings Ratio, filed under Finance. Every number the guide produces comes from substituting into this one line.