Price Earnings Ratio Valuation
P/E ratio is traditionally employed for valuation of shares however it is an important ratio in the valuation of business. The P/E ratio is the measure of how many years earning would 'purchase' the market value of the business and is given via as:
P/E ratio = MV/E
MV = P/E x E
NB: The value of the business can be calculated with taking estimated earnings x P/E ratio.