How to analyse a stock??(part2)

i would like to request you all to please pay attention for this blog as this is one of the most important topic in the field of investing in stocks.this is none other but Price to earning ratio or P/ E 

So what is it used for ???
this is used for comparing companies and the formula to calculate PE ratio is
SHARE PRICE                               OR         PRICE OF STOCK
LAST YEAR EARNING                                EARNING PER SHARE (EPS)


now you ask how to determine a when to buy a stock then listen ?
the best time to but a stock is when the purchasing cost is low and also when the price to earning ratio is low
according to Warren Buffett P/E ratio should be less than 25

Basically this tells you the value of stock is higher or lower compared to previous year

So,in short:-greater P/E means = 

1. the stock is more expensive 
2. and those people who don't have any idea invest during this time as the stock is booming 

and when P/E is lower then=

1. cheaper to buy 
2. and better value for investment 

 important !!!!!                               
and don't just depend on the numbers IT SERIOUSLY DEPENDS ON HOW THE SECTOR IS DOING IN THE COUNTRY .AND SOMETIMES ITS FINE TO INVEST IN A HIGHER P/E RATIO IF THE STOCK IS EXCEPTION IN THE STOCK MARKET