Question

the price/earning or P/E ratios on public companies are usually higher than p/e ratios on privately held firms? is that true?

Answer 1

That is not exactly true.

P/E Ratio is calculated by dividing current market price of share by the earning per share. This ratio tells, how much price investor is paying to buy a particular stock and how much earning, he is getting on the same. With the help of P/E ratio, investor can know whether the stock is cheaper or costlier.

Public companies have P/E ratios, they can be higher or lower but Private companies do not have P/E ratios because private companies are not listed on the exchange and their shares are not traded, they are not publicly traded so they do not have any current market price of the stock so P/E cannot be calculated in case of Private companies.