A multiple answers the question of how much an investor pays per unit of profit, capital, or revenue. Absolute figures from financial statements of different-sized companies are not comparable, but ratios are.
Three are most common. P/E relates market capitalization to annual profit and shows how many years it takes for an investment to pay back with unchanged results. P/B compares market valuation to the book value of equity. P/S relates price to revenue and is used where profit is unstable or absent.
Profitability metrics—ROE and ROA—are calculated separately, reflecting returns on capital and assets. For banks and insurance companies, the set of applicable metrics differs from industrial enterprises: some commonly used multiples are not meaningful for them due to different balance sheet structure.
Key application rule: multiples work only when comparing within one industry and with identical reporting standards. Low P/E can mean either undervaluation or expected profit decline, so the metric is a reason to investigate, not a final conclusion.