Which ratio reflects the stock market's assessment of a company's future performance?
A)Price/earnings ratio.
B)Dividend yield ratio.
C)Fixed asset turnover ratio.
D)Cash coverage ratio.

Question

Quizplus · Accepted Answer

The price/earnings (P/E) ratio is a commonly used ratio that reflects the stock market's assessment of a company's future performance. It is calculated by dividing the market price per share by the earnings per share. A higher P/E ratio indicates that the market expects the company to have higher earnings growth in the future, while a lower P/E ratio indicates that the market expects lower earnings growth.

Which Ratio Reflects the Stock Market's Assessment of a Company's