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# What is the formula to calculate price per share?

A:

Calculate price per share by dividing the market value per share by the earnings per share. This is also known as the price-earnings ratio or P/E ratio.

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Credit: Mikael Miettinen CC-BY 2.0

Price per share is also used to refer to an investor's individual price per share when a fixed amount of stocks are purchased each month, compared to a fixed amount of dollars being spent on stocks each month. In this situation, the formula is actually calculating the average price per share to give the investor a better comparison for deciding upon future investments. The average price per share is calculated by dividing the total amount paid for shares by the number of shares bought.

There are a number of price per share formulas used for stocks, depending on the type and time of investment. Other common calculations include the average issue price per share of preferred stock and the market price per share.

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