Because of its relationship to dividends and market price, which ratio is important to investors?
A) current ratio
B) debt-to-equity ratio
C) price/earnings ratio
D) asset turnover ratio

Question

Quizplus · Accepted Answer

The price/earnings (P/E) ratio is important to investors because it gives a sense of how much an investor is paying for each dollar of earnings. This ratio is often used as a way to compare the relative value of different companies in the same industry. A high P/E ratio may indicate that a company is overvalued or that investors are optimistic about its future growth prospects, while a low P/E ratio may indicate the opposite. Additionally, the P/E ratio is closely related to dividends and market price, which are important considerations for investors.

Because of Its Relationship to Dividends and Market Price, Which