The second part in our series on The Right Questions to Ask About Stocks takes a look at the price to earnings ratio, or P/E ratio. As you might expect the P/E ratio helps us determine the relationship between a company's price and its earnings. In a very real sense it tells us how much we're paying per dollar of earnings the company makes. This can help give us a base line to start researching a stock.

So we all have a rough idea of what earnings are, but what exactly do they mean in the corporate world? Ultimately, earnings are how much money a company made after all its expenses were deducted. The way we arrive at the number is pretty complex, but it at least gives us an answer to a simple question: Is the company making money?