The investors are generally guided by some technical measures that usually enable them to purchase shares on reasonable prices. One of these measures financially called the ratio of profit earning (P/E Ratio), where it specifically represents the percentage of the market share value to the accounting profits. However, the ratio can be precisely calculated by dividing the market share value on the earning profit per share for the last fiscal year (or the last 12-month profits).

Example:

If the share value in the market equals Dh20 and the profits for each share (EPS) equals Dh2, then the earning profit ratio equals 10 times. Accordingly, it does mean that the market share value covers profits by ten times. In terms, the investor is ready to pay Dh10 against each dirham of the profits posted.