If a company reports either no earnings for a period, or reports a loss, then its EPS will be represented by a negative number.

Since EPS goes in the denominator of the P/E ratio, it is possible to calculate a negative value.

Conventionally, however, companies will report such ratios as "N/A" rather than a negative value.

Some investors also prefer to use N/A, or else report a value of 0 until the EPS is positive.
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