The price-earnings ratio (P/E ratio) compares a company’s current share price relative to its per-share earnings. A price multiple or the earnings multiple are alternative terms. The ratio is arrived at by dividing the current market price of a company’s shares by the company’s earnings per share. In general, a high P/E suggests that investors are expecting higher earnings growth in the future compared to companies with a lower P/E. Different companies’ P/Es can then be compared, though it is important to remember that P/Es vary significantly between different industries as each industry can have much different growth prospects. The P/E is sometimes referred to as the ‘multiple’, because it shows how much investors are willing to pay per unit of earnings.