Which of the following is the formula to compute the price/earnings ratio?
A) The formula is Annual dividend per share of common stock/Market price per share of common stock.
B) The formula is Market price per share of common stock/Earnings per share.
C) The formula is (Net income - preferred dividends) /Number of shares of common stock outstanding.
D) The formula is (Total stockholders' equity - preferred equity) /Number of shares of common stock outstanding.
Correct Answer:
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