The Earnings Multiple Valuation Method, also known as the P/E ratio method, is a financial technique used to estimate the value of a business or company. It works by measuring the price of the business’ stocks relative to its earnings per share over a period of time. To calculate the P/E ratio, divide the company’s stock price by the company’s earnings per share (EPS). This serves as a useful tool for investors who want to quickly identify how much they should be willing to pay for a particular investment. By examining the P/E ratio, investors can make a more informed decision when deciding whether or not to purchase shares in a company.