The Price-to-Earnings (P/E) ratio is a financial metric used to assess the value of a stock. It compares a company's share price to its earnings per share. A higher P/E ratio indicates investors are willing to pay more for each dollar of earnings, while a lower ratio suggests the stock may be undervalued. CA Rachana Ranade explains P/E ratio basics and its importance in stock investing. Warren Buffett cautions against investing in stocks with excessively high P/E ratios.