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A term that measures some aspect of a company's financial well-being, determined by dividing one metric by another metric. The metric in the numerator is typically larger than the one in the denominator, because the top metric is usually supposed to be many times larger than the bottom metric.
Calculated as:
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For example, the term multiple can be used to show how much investors are willing to pay per dollar of earnings, as computed by the P/E ratio. Suppose you were analyzing a stock with $2 of earnings per share (EPS) that is trading at $20 -- this stock would have a P/E of 10. This means investors are willing to pay a multiple of 10 times the current EPS for the stock.
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