Apple's wealth generator

Investing in Apple has been a safe bet during the early years of its success, and if the company keeps delivering the goods then shareholders may have continued cause for celebration.

The price to earnings ratio (P/E) is a very simple measure of the “value” a company has. The price is the current share price and the earnings is usually the sum of the last 12 months’ earnings per share. In other words it measures how many of the last year’s earnings are built into the share price. Put yet another way it’s the answer to the question “If earnings don’t change, how many years will I have to wait before I’m paid back for my share purchase with retained earnings.”

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