Price to earnings ratio (P/E) is one of the indicators of market value and capital market. It indicates how much are the investors willing to pay per unit of profit.
The indicator is primary but not the only indicator used when making investment decisions.
The indicator is uninterpretable if the profit is negative.
But comparisons with companies in different industries or with past developments can be misleading.
The average value is usually about 20-25 (17), but it depends on economic conditions and the market in which the company operates.
17. Price-Earnings Ratio - P/E Ratio (online). Citation date: 7.11.2015. Available from www: http://www.investopedia.com/terms/p/price-earningsratio.asp?optm=term_v2