A P/E ratio considers
A) profits relative to earnings
B) price of the stock relative to earnings
C) price of a preferred stock relative to earnings
D) profits relative to equity

Question

A P/E ratio considers​
A) ​profits relative to earnings
B) ​price of the stock relative to earnings
C) ​price of a preferred stock relative to earnings
D) ​profits relative to equity

Quizplus · Accepted Answer

The P/E ratio, or price-to-earnings ratio, compares the price of a stock to its earnings per share. It is calculated by dividing the current market price per share by the earnings per share. This measure provides insight into how much investors are willing to pay for each dollar of earnings generated by the company, and is commonly used as a valuation metric for stocks. None of the other choices accurately describe the P/E ratio.

A P/E Ratio Considers​

A P/E Ratio Considers