P/E ratio is the ratio of the stock price per share to the earnings per share. (P/E ratio = market price per share of common stock ÷ annual earnings per share of common stock) The numerator in the above formula is the current price per share of the stock market, and the denominator can be the earnings in the latest year or the predicted earnings in the next year or years. P/E ratio is one of the most basic and important indexes to estimate the value of common stock. It is generally believed that it is normal to keep the ratio between 2 and 3. If it is too small, it means that the stock price is low and the risk is small, so it is worth buying. If it is too large, it means that the stock price is high and risky, so you should be cautious when buying. However, the stocks with high P/E ratio are mostly hot stocks, and the stocks with low P/E ratio may be unpopular stocks.

The full circulation P/E ratio does not seem to be a reasonable phrase. Full circulation means that all the listed shares can be circulated in the secondary market. At present, the share reform, which is nearing completion, is to solve the problem of full circulation. P/E ratio is the share price divided by the after-tax profit per share, which is an important consideration in valuation.

P/E ratio is an important indicator to measure the stock price and corporate profitability. Because the price-earnings ratio combines the stock price with the profitability of the enterprise, its level reflects the stock price more truly. For example, if the earnings per share of two stocks with the same share price in 5 yuan are 5 yuan and 1 yuan, their P/E ratios are 1 times and 5 times respectively, which means that they are 5 times different from the current actual price level. If the profitability of the enterprise remains unchanged, it shows that it will take 1 years and 5 years for investors to recover their investment from the profitability of the enterprise after buying two kinds of stocks at the same 5 yuan price. However, because the profitability of enterprises will change constantly, investors pay more attention to the future of enterprises when buying stocks. Therefore, some companies with good development prospects are willing to buy even if the current P/E ratio is high. Companies with high expected profit growth rate will also have higher P/E ratio. For example, for two companies whose earnings per share were both in 1 yuan last year, if Company A maintains a profit growth rate of 2% every year and Company B can only maintain a growth rate of 1% every year, then by the tenth year, Company A's earnings per share will reach 6.2 yuan and Company B will only have 2.6 yuan, so the current P/E ratio of Company A must be higher than that of Company B.. If investors buy shares of this company at the same price, their investment in Company A can be recovered earlier. ?

in order to reflect the price level of stocks in different markets or industries, the overall P/E ratio of each market or the average P/E ratio of listed companies in different industries can also be calculated. The specific calculation method is to divide the total market value of all listed companies by the total after-tax profits of all listed companies, and then the average P/E ratio of these listed companies can be obtained. ?

There are many factors that affect the overall P/E ratio of a market, the two most important ones are the economic development potential of the region where the market is located and the market interest rate level. Generally speaking, listed companies in emerging securities markets generally have good development potential and high profit growth rate. Therefore, the overall P/E ratio of emerging securities markets will be higher than that of mature securities markets. The price-earnings ratio of developed countries such as Europe and America is generally maintained at around 15 ~ 2 times. However, the stock market in some developing countries in Asia has a normal P/E ratio of about 3 times. On the other hand, the reciprocal of P/E ratio is equivalent to the expected profit rate of stock market investment. Therefore, due to the pursuit of average profit rate by social funds, the reasonable P/E ratio of a country's securities market also has a reciprocal relationship with its market interest rate.

P/E ratio is an important index to analyze the securities market. However, due to its simplicity, intuition and incompleteness, improper use can easily lead to misunderstanding, thus affecting the correct understanding of the securities market. In view of this, this paper analyzes the price-earnings ratio and the related stock market bubble.

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