The most common measure of how expensive a stock is. The earnings multiple is equal to a stock's market capitalization divided by its after-tax earnings over a 12-month period, generally the trailing period but occasionally the current or forward period. The value is the same whether the calculation is done for the whole firm or on a per-share basis. The higher the earnings multiple, the more the market is willing to pay for each dollar of annual earnings. Also known as price/earnings ratio (P/E ratio).