The financial ratio measured as the price per share of stock divided by earnings per share is known as the:
A) Return on assets.
B) Return on equity.
C) Debt-equity ratio.
D) Price-earnings ratio.
E) Du Pont identity.

Question

Quizplus · Accepted Answer

The price-earnings ratio (P/E ratio) is calculated by dividing the market value per share by the earnings per share (EPS). This ratio provides an indication of the market's expectations of a company's earnings growth and is often used by investors to determine the relative value of a company's shares.

The Financial Ratio Measured as the Price Per Share of Stock