The Price-to-Earnings (P/E) metric is a ratio which is used as a multiple for estimating the value of a closely held business. The metrics is one of the multiples which is applied under the market approach to estimate the fair market value of closely held businesses or an interest in such businesses. The P/E ratio is computed by dividing the price of the share by earnings per share. The main inputs are the price of the share and the Earnings Per Share (EPS) which is computed as net income divided by the number of outstanding common shares. Once the P/E metric is computed, it is compared with P/E multiples of publicly traded companies (companies listed on stock exchanges) to determine an appropriate multiple to apply to the closely held business or the interest in the business which is being valued. The P/E multiple works best by selecting comparators from the same industry as different industry present different P/E ranges as a result of unique industry characteristics. To arrive at the fair market value of the closely held business or interest being valued, business valuators multiply the shares of the business by the P/E multiples.