EARNINGS YIELD

The ratio of earnings per share , after allowing for tax and interest payments on fixed interest debt, to the current share price. The inverse of the price/earnings ratio . It is the total twelve months earnings divided by number of outstanding shares , divided by the recent price, multiplied by 100. The end result is shown in percentage. We often look at earning yields because it avoids the problem of zero earnings in the denominator of the price/earning ratio.