Identify two reasons for the existence of different valuations produced by the Price-Earnings Method. Which would you use and why? Solution Price Earning ratio (P/E) Gives a fair idea about potential market price of a share.It indicates expectations about the future of a company. PE ratio =market price per share/earning per share It is considered as the best indicator of the on going performance of a company. The shares that have high P/E ratio are considered as high growth shares..