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# Learn Financial Freedom Step by Step

P/E means price earning ratio and p/b ratio means price book ratio. Both are very important to decide whether to buy or not any share. Only showing growing trend in Google search by writing company name and 5 years growth not enough. We have to go forward.

For example, I took the financial statement of Ester Industry from Money control website.

I did not find both ratio. but If I find raw data like today market price of one share of ester industry = Rs. 145

earning per share = Rs. 17

and book value per share = 61.95

In the google trend its share is giving 3 times return in last 5 years. (Return here means capital gain if I sell)

now it is very easy for me to find my p/e ratio = 145/17 = 8.5 which is fair value

It means, I have to invest rs. 8.5 for getting Rs. 1 earning from this company.

It also means that if I will invest 100, it gives me 11.71% earning to me.

That is more than govt. FD which is 4.5% on investing Rs. 100

Now we are calculating price book ratio

= 145/61.95 = 2.3 times

We are invest in the company whose price 2.3 more than its actual book value of its share.

## Ashok Kumar's Contents\$type=blogging\$show=https://www.svtuition.com/p/ashok-kumar.html\$hide=author

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Svtuition: How to Find the P/E Ratio and P/B ratio from Company's Financial Statement
How to Find the P/E Ratio and P/B ratio from Company's Financial Statement