Earnings Yield is the reciprocal of the price/earnings ratio.

Question

Quizplus · Accepted Answer

The earnings yield is calculated by taking the earnings per share (EPS) and dividing it by the current market price per share. Therefore, the higher the earnings yield, the more profitable the company is considered to be for investment purposes. The price/earnings ratio (P/E ratio) is calculated by dividing the market price per share by the earnings per share. The earnings yield is the reciprocal of the P/E ratio, so they are inversely related.

Earnings Yield Is the Reciprocal of the Price/earnings Ratio