Which ratio gives an indication of how investors believe a company's stock will perform in the future compared to other companies?
A) Return on stockholders' equity
B) Earnings per share
C) Price earnings (P/E)
D) Return on assets

Question

Quizplus · Accepted Answer

Price earnings (P/E) ratio gives an indication of how much investors are willing to pay per dollar of earnings, which reflects their belief in the company's future earnings potential compared to other companies. Therefore, P/E ratio is commonly used to evaluate a company's potential growth and performance.

Which Ratio Gives an Indication of How Investors Believe a Company's