Before we start, for the examples below, we will use Apple’s annual report (FY2022) which you can download here. There’s no particular reason why, it’s just that Apple’s report is relatively structured and easy to use.
Also, in the real-life application, it’s advisable for you to use the latest available data, based on their latest report (usually), but since ours is just to tell you the methods of calculating it, we don’t mind using the a-bit-outdated report. When you’re doing it in real life, it concerns your money, try to get the latest data possible.
The formula for the P/E ratio is as follows:
Price to Earning Ratio = Current Market Price / Earnings Per Share
Where,
Earnings Per Share = Earnings / Weighted Average Number of Shares Outstanding
First, we’ll look into Apple’s current market price, but since the report is published in late September 2022, we’ll pretend that the current price is the price at that point of time which is $142.48 (as of September 29th, 2022).
Now, to look for EPS we will need its earnings and weighted average number of shares outstanding.
Here is Apple’s earnings which is $99,803 million. Do note that when we say earnings, we refer to the net income, and when say revenue, we refer to the net sales (a bit on the top in the table below).