CNBC’s Jim Cramer told investors it’s important to understand the basics of terminology used to describe a company’s value, including price-to-earnings multiples.
The price-to-earnings multiple, also referred to as a P/E multiple or just a multiple, is the ratio of a company's share price to its earnings per share. This multiple is used to determine how much investors are willing to pay for a company's stock in relation to its earnings.
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