All else constant,which one of the following will decrease if a firm increases its net income?
A)Return on assets
B)Profit margin
C)Return on equity
D)Price-sales ratio
E)Price-earnings ratio

Question

Quizplus · Accepted Answer

The price-earnings ratio (P/E ratio) is calculated as the market price per share divided by earnings per share (EPS). If net income increases, EPS increases, which can lead to a decrease in the P/E ratio if the market price per share does not increase proportionally.

All Else Constant,which One of the Following Will Decrease If